Canal Company's Case

Bryan, J. The question which we are called upon to decide cannot be clearly understood without some statement of the previous proceedings in this case. On the second day of October, eighteen hundred and ninety, the Circuit Court for Washington County, sitting in equity, passed a decree for the sale of the Chesapeake and Ohio Canal. It was decreed that the sale should embrace all the rights, title and interest of the corporation, to the entire line of the canal; all its lands, tenements and estates, works and appurtenances, tools, implements and boats, water-rights and franchises. All the parties in interest were before the Court, and the decree bound all their rights in the subject-matter of litigation.

It was provided in the decree that its execution should be stayed and suspended on certain conditions, which will hereafter be more particularly considered. The parties to the suit in which the decree was passed were the trustees of the holders of the bonds issued under the Act of 1844; the trustees of the bonds issued under the Act of 1878; the State of Maryland; the Chesapeake and Ohio Canal Company ; Bernard Carter, executor of the last will and testament of Charles H. Carter, deceased; and certain bondholders whose rights are not now in question. Appeals were taken from the decree severally by the State of Maryland, the canal company and Mr. Carter, but by none of the other parties to the suit. The decree of the Circuit Court was affirmed by this Court.

The case is reported in 73 Maryland, 484 . The clauses in the decree suspending its execution authorized the delivery of the canal and all its property to trustees of the bonds issued under the Act of 1844, provided that thay should take up and bring into Court all the outstanding bonds issued under the Act of 1878 ; and that they should put the canal in good repair and condition throughout its entire length, and do certain ⁵⁸² other things which it is not important now to mention. Upon the performance of these conditions the trustees of the bonds of 1844 were to be subrogated to the place of the trustees of the bonds of 1878, with all their rights and remedies, and were to have full possession and control of the canal, and to exercise all the franchises of the corporation. It was further decreed as follows : “ Sixth.

That if at the end of four years from the first day of May next, there shall not have been tolls and revenues derived from the said canal, and the property and rights appurtenant thereto (over and above the amount necessary to pay current operative expenses and to keep the canal in repair), to liquidate and discharge the amount of the cost of repairing and restoring the canal to a working condition from its present broken condition, and the amount of money required to pay expenses and compensation to the receivers, and to pay any amount that may be determined to be a preferred lien on such tolls and revenues for labor and supplies furnished to the canal company, such failure in the tolls and revenues shall be regarded as evidence conclusive (unless the time be extended by the Court for good and sufficient cause shown) that the said canal cannot be opereted so as to produce revenue with which to pay the bonded indebtedness of the said canal company; and further, whenever it shall clearly appear that the said canal cannot be operated by the said trustees so as to produce revenue with which to pay the bonded indebtedness of said company, the right and power is hereby reserved to this Court to order and direct the execution of the foregoing decree of sale.” The 1844 trustees complied with the required conditions and entered into possession of the canal, made necessary repairs and have operated it ever since. In January, 1894, these trustees filed a petition in the Cii'cuit Coux't for Washington County, pi-aying that the pexfiodfor which the execution of the deci'ee was stayed should be extended for an additional tex'm of ten yeai's. After answer by the State in ⁵⁸³ opposition to the proposed extension, the Court ordered that the execution of the decree should be stayed for a period of six years from the first day of May, eighteen hundred and ninety-five. The State appealed from this orderj and the case was argued at the last October term of this Court.

It was considered that before a sale was made it was proper to settle the priorities of the different parties in the distribution of the proceeds. And as some of the counsel in the cause desired to argue this question more fully, the Court granted the request, and ordered it to be reargued at the present term. The argument took a much wider range than we anticipated, tending (if we correctly understood the counsel for the appellees) to impeach the validity of the decree for the sale. This decree was passed by a Court of competent jurisdiction, with all the parties in interest represented by counsel before it, and was affirmed by this Court after full and elaborate argument and upon great deliberation.

It has all the sanction which the law can give to any decree, and it cannot now be disturbed. But, as the matters involved are of great public interest, we have thought it well to give our views upon the whole question. In April, eighteen hundred and thirty-five, the canal cor-portion executed a mortgage to the State of Maryland. It embraced the following property : “ All and singular, the lands and tenements, capital stock, estates and securities, goods and chattels, property and rights now or at any time hereafter to be acquired, and the net tolls and revenues of said company.” In May, eighteen hundred and thirty-nine, it executed another mortgage and described the mortgaged property in the same terms.

By the Act of 1844, chapter 281, the canal company was authorized and empowered to borrow a sum of money not exceeding one million seven hundred thousand dollars, and to execute preferred liens on its revenues in the manner mentioned in the Act for the purpose of securing the loan with interest. The lien on the revenues was limited by the second section of the Act, wherein it was enacted “ that the president and directors of ⁵⁸⁴ said company shall from time to time, and at all times hereafter, have the privilege and authority to use and apply such portion of said revenues and tolls as in their opinion may be necessary to put and keep the said canal in good condition and repair for transportation, provide the requisite supply of water and pay the salaries of officers and agents, and the current expenses of the said company.” By the fourth section the liens of the State on the revenues were “ waived, deferred and postponed ” in favor of the bonds to be issued, so as to make them preferred liens on the revenues according to the provisions of the second section. By the sixth section the canal company was authorized to execute any deed, mortgage or other instrument of writing necessary or expedient tó give the fullest effect to these provisions. And by the seventh section the 'canal company was required to execute to the State a further mortgage on the said canal, its lands, tolls and revenues,” subjéct to the liens above mentioned.

Mortgages were executed according to the tenor and effect of the requirements of the Act. The difference is very striking between the mortgages to the State, and the mortgage to secure the bonds of 1844. The canal itself, and all its property,'as well as its tolls and revenues had been previously mortgaged to the State. While the lien of the bondholder is only on the revenues, subject to deductions from them for repairs, supply of water, salaries and current expenses.

In other words, only on the “ surplus net revenues aforesaid,” as they are styled in the fifth section of the act. And the revenue was liable to be still further reduced upon other contingencies which were altogether probable. The Act of 1843, chapter 124, gave the canal company power to borrow money for the objects of its charter, and to pledge its property and revenues for the payment of the loan; provided that the prior rights and liens of the State should not be impaired, which had been acquired under mortgages previously executed. This Court in the canal case ( 32 Maryland, 501 ) decided that this grant embraced the power to construct the canal, repair it and keep ⁵⁸⁵ it in order; and that before the liens of the bondholders of 1844 should be paid the canal company had “power to use and apply its revenues in such way as to preserve the existence of the canal, and keep it a living operative work, capable of earning tolls and revenues, and subserving the great public purposes for which its charter was granted.” We quote the language of the Court on page 535.

And in speaking further of the position that the lien of these bondholders was prior to the claims for repairs they say on pages 538 and 539 : “They took security only upon expected tolls and revenues, and only on so much of them as might remain after repairs and other expenses were first provided for. There is certainly no equity in the pretensions they now assert. But the conclusive answer to their whole complaint is, that by the face of their bonds they were referred to the Act of Assembly, a public statute of a State, under which they professed to be issued, and are in law chargeable with knowledge of all its provisions and of the true construction to be placed upon them by the Courts. And besides this, the mortgage taken for their benefit recites the proviso in the second section of this Act, as well as all its other provisions, and devotes the mortgaged tolls and revenues to their security only, ‘ after payment of the debts now existing and that may hereafter be contracted and in arrear for repairs on the canal and officers’ salaries.’ ” It was in that case clearly decided that if the receipts from tolls and revenues should be insufficient to make repairs the canal company had the right to issue bonds for the purpose of obtaining the necessary funds, and to pledge its after accruing revenues in preference to a pre-existing lien upon them.

Now a lien on revenues subject to regular and stated deductions of large amounts, and liable to others of an indefinite aggregate on contingencies which would probably occur cannot be put in the same category with a fixed and definite mortgage on the canal and all its property. The difference between the interests conveyed is enormous. The meaning of the fourth section of the Act was that the State ⁵⁸⁶ should not take the revenues so as to defeat the limited right to them which was pledgéd to these bondholders, but nothing is said about waiving its lien on the lands and other property of the canal. It was intended that the State should agree that these bondholders should have these net •revenues as far as they might have them under the law; but its agreement extended no farther.

The language of the seventh section requiring a mortgage to the State “ of the canal, its lands, lolls and reve nues’’ shows that the Legislature, by using a distinctly different phraseology, intended to designate a distinctly different interest from that conveyed to these bondholders. By the Act of 1878, chapter 58, the Legislature authorized the issue of bonds which were intended to have priority over the liens of the State. It was enacted that they should be secured by a mortgage of the “ tolls and revenues and other property, land, water-rights and franchises ” of the canal company. By the third section of the Act it is declared that the said bonds and the mortgage are “ liens upon the property, tolls and revenues of the Chesapeake and Ohio Canal Company, to be held and enjoyed in preference to any •rights or liens which the State of Maryland may have in or upon the said property, tolls and revenues of the said Chesapeake and Ohio Canal Company, until the said bonds provided to be issued under this Act, and coupons thereon, according to the legal obligations thereof against said company, are wholly paid and satisfied.” The language is in strong contrast with that used in the Act of 1844.

It is morally impossible to suppose that the Legislature did not intend to'convey totally different meanings by expressions so widely dissimilar. When this case was in the Circuit Court before the decree for sale of the canal was passed, the trustees for the bondholders under the Act of 1844 filed a petition praying that there should be a reference to an auditor to report on the priority of the liens on the canal. The case was not so referred, but the learned Judge who was presiding delivered a- most able and exhaustive opinion, ⁵⁸⁷ in which he held that these trustees had no lien on the coi'pus of the canal. This opinion is published in the appendix to 73 Maryland.

It was because the only security for the payment of the bonds of 1844 depended on the condition of the canal to earn revenue that the Court inserted in the decree for sale the provisions for suspending its execution. It is stated in the appellees’ brief that the grant of.all the tolls and revenues carries the entire beneficial ownership. It is also stated “ that the right to all the rents and profits of land, or the right to the whole revenue from it, or the right to the whole interest or dividends derivable from personal property, necessarily includes all beneficial interest of every kind which can exist in such property, and for the same reason that when to one has been granted the right to have all the revenues derivable from an estate or property, there is no beneficial interest left in that property for any one else.” The authorities cited to sustain these positions will not be questioned. But there is a vast difference between a grant of all the revenues and a grant of the kind authorized by the Act of 1844 ; a grant of revenues from which the grantor makes great deductions, some of them occurring at stated intervals and others liable to occur in not improbable contingencies to such an amount as might extinguish them altogether.

In the most favorable view which can be taken of these revenues they are merely “surplus net revenues,” and they are so styled in the Act of Assembly. It is not held anywhere that a grant of net revenues is a grant of the property itself. A conveyance of land to a trustee in trust to permit some other person to take the rents and profits vests the entire legal estate in the pernor of the profits ; but a conveyance to a trustee to pay some other person the net rents and profits leaves the entire legal estate in the trustee and imposes on him the duty to collect the rents and profits and pay over the net amount, after deducting expenses. The reason is that in the first instance the cestui que trust (the beneficiary) has the entire interest; ⁵⁸⁸ while in the second he is entitled only to the profits after the trustee has deducted thé expenditures which he has made.

Much reliance was placed on South Eastern Railway v. Jortin, 6 House of Lords cases, 425. The decision in that case depended on the construction of a number of Acts of Parliament. The Folkstone Harbor Company obtained a loan of ten thousand pounds from the Exchequer Loan Commissioners and executed an indenture which, after reciting certain Acts of Parliament, declared that the company, “ in pursuance of the provisions of the Folkestone Harbor Acts, assigned all and singular the rates, duties and receipts whatsoever, then or hereafter to become payable by virtue of the said Acts, and the right, title and interest of the company in and to the same, and all freehold and leasehold messuages, lands, tenements and hereditaments belonging to the said company, according to the nature and quality of the same premises respectively, but subject to the proviso for redemption thereinafter contained.” Before the making of this loan the previous creditors and mortgagees of the Harbor company had executed an agreement in writing that any mortgage or other security which should be taken by the Loan Commissioners on the rates, duties and receipts of the Harbor company to secure the payment of the loan of ten thousand pounds should have priority over the respective securities then held or thereafter to be held by them, the said creditors and mortgagees, in the following manner, that is to say, that in the first place the commissioners should be pqid annually out of the rates, duties and receipts interest on the loan; in the next place that the said creditors should be paid their interest out of such rates, duties and receipts ; and after such payment of interest the surplus of said rates, duties and receipts should be applied to the payment of the ten thousand pounds, in preference to and with priority over all- claims and demands whatsoever which the said creditors and mortgagees, or either of them, might have on the said rates, duties and receipts.- The interest on the ⁵⁸⁹ loan having fallen many years in arrear the commissioners sold the tolls, rates, receipts, freehold hereditaments, &c., to trustees for the South Eastern Railway Company. Mrs. Jortin, one of the creditors, claimed that she was entitled to a charge on the Folkestone Harbor and the buildings belonging to it.

The principal question was whether the commissioners had power to sell the property. The House of Lords decided that by virtue of numerous Acts of Parliament (especially i and 2 William IV, chapter 24, section 21), the commissioners had the power to sell and convey an unencumbered title to the purchaser. They decided further, that Mrs. Jortin and the other creditors must assert their claims against the proceeds in the hands of the commissioners and not against the property which had been sold. The Lord Chancellor said in his opinion : “ The other mortgagees will still have all which they contracted for; that is, a right to be paid their interest before anything is paid to the commissioners in discharge of their principal.

This right, however, is one which they can enforce only against the commissioners who have in their hands the proceeds of the sale.” We do not find anything in this decision contrary to what we have said. The appellees also cited Ketchum v. St. Louis, 101 U. S. Supreme Court, 306. The State of Missouri had the first mortgage on the property franchises and income of the Pacific Railroad Company of Missouri. By the Act of 1865, the Legislature of Missouri authorized the County Court of St. Louis County to issue seven hundred county bonds of a thousand dollars each and loan them to the Pacific Railroad Company for the completion of its road.

The second section of the Act was as follows : “ Sect. 2. The fund commissioner of the Pacific Railroad, or such person as may at any time hereafter have the custody of the funds of said railroad company, shall, every month after said bonds are issued, pay into the county treasury of St. Louis County, out of the earnings of said Pacific Railroad, $4,000, and $1,000, additional in each month of December, to meet the interest ⁵⁹⁰ on the said seven hundred bonds; said payments to continue until said bonds are paid off by' the Pacific Railroad.” The property and franchises of the road were sold under a subsequent mortgage without prejudice to the lien claim of St. Louis County. It was held that the county- of St. Louis had an equitable lien on the earnings of the railroad which was enforceable on the railroad property and franchises, and was paramount to any' mortgage or lien thereon. We must take notice of the fact that the office of fund commissioner was established by statute, and that it was the duty of this officer to take possession of the gross earnings of the road from every source-101 U. S. R. p. 308.

The statute of 1865 was therefore a specific appropriation of these gross earnings to the payment of these bonds. This appropriation was made upon valuable consideration by the contract of all parties who were at the time interested in the property. We think that nothing more need be said to show the great difference between gross earnings and surplus net earning ; between the whole beneficial interest and the fractional part of such interest pledged by the Act of 1844. The Central Ohio Railroad Company issued its bonds containing this stipulation: “ For the punctual payment of the interest and principal of this obligation, and others of like tenor, issued or to be issued, in preference to the payment of the dividends on the capital stock of said Central Ohio Railroad Company, the income arising from their road, and its appurtenances, is hereby specificially pledged.” It was argued in this Court that these bonds were “ (as between the railroad company and the holders), an equitable lien on the whole income or revenues of the road,” and “that it was apledge of all the income or revenues of the road, amounting in equity to a pledge of the road itself, and creating, therefore, an equitable mortgage on the road, its franchises and revenues;” appellees argument in Garrett v. May, at 185 and 186 pages of 19 Maryland.

The appellant argued that “ The word income, here, means net income from the ⁵⁹¹ road and its appurtenances.” Ibidem, page 194. The question was whether the railroad company could execute its third mortgage, which would have priority over these income bonds. This Court held that it had such right. It will be seen that the execution of this mortgage conferred a power to sell the railroad, and in this way entirely defeat the income bonds.

It was shown in the Canal case (32 Maryland) that the bondholders of 1844 took security only on “ expected tolls and revenues, and only on so much of them as might remain after repairs and other expenses were first provided for.” And even this security was subject to the right of the Canal company to create other debts for repairs and make pledges of its future revenues which would have priority over it. It was also taken in subordination to the existing rights of the State upon all the property of the canal company, secured by mortgages, under which, in case of default, it might be sold, and an unemeumbered title conyeyed to the purchaser. And the lien of the State on the canal, its lands and chattels, has never been waived in favor of these bondholders. After the Court had delivered an opinion stating that a decree for sale would be passed, these trustees filed a petition praying that possession of the canal should be delivered to them, and stating that if it was delivered to them they could restore it as a waterway and operate it so as to derive tolls and revenues sufficient to pay the principal and interest of the bonds of 1878 and of 1844; and they prayed that in the decree for sale there might be a provision for a postponement of it.

This petition was vigorously resisted by the State. As has been already stated, the Court granted a suspension of the sale on certain terms. The opinion of the learned Court shows very distinctly the grounds of its action. We quote a passage from it: “ To prevent this sale, and to preserve the only security to which the bondholders under the Act of 1844 are entitled, their trustees under the mortgage come in and pray to be allowed to take possession of the canal, and to ⁵⁹² repair and operate it, at their own costs, depending alone for reimbursement, of the outlay, upon such revenues, as they may be able to realize from the operation of the work; and to that end they pray that they may be allowed to redeem the bonds issued under the Act of 1878, and be subrogated to the rights of the holders thereof, under that Act.

Can they be denied this right? I think not.” The Court had already stated in its opinion of September the first, 1890, that on account of the ruinous condition of the canal, it could not be restored with any reasonable prospect that it could be made to produce revenue applicable to its large bonded indebtedness ; and saying: “ But all must concede, that if the canal is to be sold, no possible good can result from delay. The condition of the work is constantly growing worse, and there is no reasonable prospect of an enhanced price being obtained by any delay that may occur. On the contrary, any considerable delay will most certainly depreciate the saleable value of the work.” Among the conditions on which the sale was postponed are the following: “ Third.

That the said trustees, acting under the said mortgage of the 5th of June, 1848, shall by the first day of May . next, 1891, at their own cost and expense, to be reimbursed to them, as hereinafter directed, have put in good repair and condition the entire canal from one' terminus thereof to the other, so that it be fit for, and capable of, safe transportation thereon, and that upon so restoring said canal to a state of good repair and condition, the said trustees shall proceed to operate the same as a public waterwaj, with all the lights, and subject to all the conditions and limitations, granted and prescribed by the charter of said company; and the said trustees shall keep gaid canal in good repair and condition, and continue to operate the same, save and except when such operation may be suspended by the action of causes against the effect of which, prudence and due care in management will not provide. And the tolls and revenues received or derived from the ⁵⁹³ use and operation of said canal as a public waterway, and from the property and rights of the canal company, shall be applied by the said trustees as follows : First. To pay all current and ordinary expenses incurred in operating the said canal, and for keeping the same in good working repair. Second.

To pay and reimburse the said trustees the amount of money brought in by them, with which to pay the expenses incurred by the receivers, and their compensation, with interest thereon. Third. To pay and reimburse to said trustees the amount expended by them in restoring the said canal to good working order from its present waste and broken condition, with interest thereon. Fourth.

To pay and reimburse said trustees any amount that they may be required to pay, as constituting a superior lien on the tolls and revenues of said canal company to that of the bonds issued under said Act of 1844, ch. 281, for labor and supplies furnished to the said canal company, while said canal was operated and controlled by said company, with interest on the amount so paid. Fifth. To pay the interest that has accrued and may accrue due on the bonds issued under the Act of 1878, ch. 58, and then the principal of said bonds. And Sixth.

To pay the interest that has accrued and that may accrue due on the bonds issued under the Act of 1844, ch. 281, and then the principal of said bonds. And upon the full payment these of last-mentioned bonds the possession and control of said trustees shall cease and terminate.” The postponement was to continue until the first day of May, 1895. That time has long since passed and the experiment, which the Court considered a hazardous one, has utterly failed. The petition by the trustees now before us, filed in January, 1894, for the purpose of obtaining a further postponement of the sale, contains the following statement: “These trustees have borrowed for the purpose of making said repairs $435,163.34.

Their receipts from net tolls, rents and other sources to December 1st, 1893, have been $270,- 970.73■ Their expenditures have been for the repair of ⁵⁹⁴ the canal and its works, under the orders of the Courts, $430,764.43 ; for other accounts, $250,327.17. This statement does not include $15,000 borrowed and paid as the compensation of the receivers of this Court and the Supreme Court of the District of Columbia.” There are hopes and expectations on the part of the trustees for greater success in the future. But these hopes have signally failed in the past. The projected enterprise will be subject to all the uncei'tainties of the futui'e.

The adjudicated right of the State for a sale has ah'eady been postponed for nearly six years ; during this interval large arrears of interest have accumulated, which will never be paid. For a long'series of years the canal company has been unable to produce more than, a small amount of í'evenue; in the meantime the bonded debt of the State is accumulating, with the prospect of payment becoming more unfavorable evexy year. Unless its rights are to be entirely saciified there ought to be some definite limit to the delay in obtaining the x-emedy which the law has given it. The bondholders of 1844 have made the expeiiment which they desix-ed to make, upon conditions offered to them by the Court, and made a part of its solemn judgment.

By the sixth article of the suspending provision it was decreed that if by the fii'St day of May, eighteen hundred and ninety-five, the tolls and revenues should not be sufficient to pay the amounts mentioned in the ai'ticle, “ such failui'e in the tolls and revenues shall be regarded as evidence conclusive (unless the time be extended by the Court for good and sufficient cause shown) that the said canal caxmot be opei'ated so as to produce revenue with which to pay the bonded indebtedness of the said canal company.” This failui'e has occurred in the tolls and í'evenues. And the l'esult stipulated and decx*eed ought now to follow. The light of a mortgagee to sell the mortgagor’s property on default'is obtained by a solemn contx-act, which the law is bound to pi'otect. If the enjoyment of this light is delayed now, it may be delayed again and again.

Repeated delays will greatly impair, and ⁵⁹⁵ may destroy its value. And the right of precedence belonging to a prior mortgagee will be subordinated to the inferior right of a subsequent lienor. (Filed June 17th, 1896). The result of our opinion is that the decree for sale passed by the Circuit Court and affirmed by this Court ought to be executed without further delay.

And that the bonds of 1878 have the first lien on the proceeds of sale; the claims of the State under its mortgages have the second, and the bonds of 1844 have the third. As the Legislature at its last session enacted that certain labor claims should be paid out of the amount coming to the State, these claims will be paid according to the directions of these statutes. As it was distinctly decreed that the trustees should repair the canal at their own cost and expense, and look to the tolls and revenues for repayment of the amount expended ; and as the trustees prosecuted the work on this understanding, the expenses which they have incurred will not be paid out of the proceeds of sale. McSherry, C. J., delivered the following opinion : I assented to an affirmance of’ the order appealed from for the reasons I am now about to set forth.

With one of the views expressed in both the opinions that have been filed 1 find myself wholly unable to agree ; and upon another question I go much farther than the Judges who concurred in the opinion prepared by Judge Fowler. With the most profound deference and respect for the judgment of all my brothers, I am, after a patient and thorough examination of the whole case, driven to a conclusion on that branch of it relating to the priorities of the liens on the canal which is diametrically opposite to the determination reached by all the other Judges who sat in the case; and this, too, in spite of a strong inclination on my part to yield my own views to their better and much more reliable judgment. As every suitor is entitled to have each Judge who hears his case investigate and pass upon it to the utmost of his ability, I feel no reluctance in stating what the convictions resulting from ⁵⁹⁶ my investigations are, and in setting forth, somewhat at length, the reasons which led me where I stand. That I may be in error, and that my brothers may be right upon the question of priorities, is entirely likely; but as neither the arguments at the bar nor the discussions in the consultation room, nor my own reflections, have enabled me to see, to my satisfaction, that I am wrong, I feel bound to adhere to my own conclusions, arrived at after much thought and deliberation, rather than to tacitly acquiesce in a determination which I cannot persuade myself is right.

If the bonds issued under the Act of eighteen hundred and forty-four, chapter two hundred and eighty-one, and secured by the mortgage of June the fifth, eighteen hundred and forty-eight, are entitled to a priority over the liens held by the State of Maryland, then a decree directing the sale of the canal, without making provision for the payment of those bonds, as a preferred lien, would obviously be erroneous; and as both opinions hold that those.bonds are subordinate to the mortgages executed to the State, and as I entertain the directly opposite view, I could not concur in a reversal of the order appealed from without consenting to a sale of the canal free and discharged of the very lien which, as between the State and the bondholders of eighteen hundred and forty-four, I believe to be the paramount lien ; and therefore the lien entitled at law and in equity to be first paid and satisfied, before the State could j ustly claim a dollar. Consequently, but not for that reason only, I united with Judge Fowler, Judge Roberts and Judge Russum in affirming the order extending the time allowed the trustees of the bondholders of eighteen hundred and forty-four to hold possession of and to operate the canal. To have done otherwise would have resulted not only in dispossessing the trustees, but in stripping them of that which, in my estimation, is their just priority. Are, then, the bonds issued under the Act. of 1844, ch. 281, a lien on the entire canal and entitled to payment, in the event of a sale, in preference to the claims held by the State of Maryland under her mortgages ? ⁵⁹⁷ To intelligently answer this inquiry it is absolutely essential, it seems to me, that we should look back briefly into the history of the canal from its origin ; know the powers the company possessed under its charter, appreciate the struggles encountered in the progress of its construction, understand its financial condition before and at the time the bonds were issued, and learn the expectations and hopes shared by its friends and projectors as to the ultimate benefits which its completion to Cumberland, it was confidently predicted, would realize.

In a word, we ought to consult the contemporaneous understanding of all the parties to the transaction, as evidenced by their acts, in seeking for the meaning of the contracts under which the bonds were issued. Informed by these means of those things which more than half a century ago influenced the conduct and shaped the judgment of the individuals who, as representatives of the State and as the officers of the canal company, engaged in consummating the contracts about to be considered ; a safer and surer guide for interpreting the meaning of those contracts will be afforded than there can possibly be obtained when, unaided by “foreign circumstances,” their naked language written more than fifty years ago, alone is looked to and construed. It may not be uninteresting to observe at the outset that the project of a chain of internal improvements by way of the Potomac River and across the mountains to the navigable waters which flow into the Ohio originated with General Washington, probably anterior to seventeen hundred and seventy-four. At all events, he obtained from the Legislature of Virginia in that year a law authorizing such persons as were disposed to undertake the scheme to open the Potomac so as to render it navigable from tide-water to Wills’ Creek; and, notwithstanding the Legislature of Maryland interposed objections to a concurrence in the law, some progress had been made, when the battle of Lexington turned the attention of all the colonists to the struggle which finally resulted in our independence.

After the revo ⁵⁹⁸ lutionary contest had ended General Washington again took up the subject of the improvement of the navigation of the Potomac up the North branch or to Fort Cumberland; and at his suggestion deputies were appointed by the Legislatures of Virginia and Maryland in seventeen hundred and eighty-four to confer and agree upon the provisions of a bill having that object in view. Such a bill was accordingly prepared and was adopted by the Legislature of Virginia in October, seventeen hundred and eighty-four, and by the Legislature of Maryland at the November session of the same year, and on the seventeenth of May following the Potomac Company was duly organized. By the tenth section of its charter it was provided “ that the said river and the works to be erected thereon, in virtue of this Act, when completed, shall forever thereafter be esteemed and taken to be navigable as a public highway, free for the transportation of all goods, commodities or produce whatsoever, on payment of the tolls imposed by this Act. And this language, changing the word “ river” into “ canal,” was incorporated in the fourteenth section of the charter of the Chesapeake and Ohio Canal Company.

General Washington became the Potomac Company’s first president, and continued to hold that position until called to fill the exalted station of President of the United States. The time limited in the acts of incorporation for the completion of the work having expired and the work not having been finished, various extensions were' granted by the Legislatures of the two States that had chartered the company, until finally, in eighteen hundred and twenty, after Maryland had passed five and Virginia ten different Acts extending the- period for constructing the work, and after thirty-seven years of labor and experience and the expenditure of over a half million of dollars, it became evident that the river could not be so improved as to answer the purpose intended. But a strong sentiment as to the feasibility of a continuous canal to the Ohio had grown up, and was fortified by the report of the civil engineer of Virginia; and the project was commended ⁵⁹⁹ in a report of a committee of Congress in May eighteen hundred and twenty-two. As a result of this sentiment and the impetus it had received from the sources just named, public meetings were held in various places and delegates were selected from Virginia, Maryland, Pennsylvania and the District of Columbia to assemble in convention.

The convention met and drafted memorials to the Legislatures of the States named and to the Congress of the United States, seeking an incorporation of a company for the construction of a canal from the tide-water of the Potomac by way of Cumberland to the mouth of Savage River, and ultimately to the navigable waters of the Monongahela or Ohio Rivers, and asking the assistance of these States and of Congress in providing the requisite means to construct the work. On the twenty-seventh of January, eighteen hundred and twenty-four, an Act incorporating the Chesapeake and Ohio Canal Company was passed by the Legislature of Virginia, but its vitality was made to depend upon the assent of the Legislatures of Maryland and Pennsylvania and the Congress of the United States. On the thirty-first of January, eighteen hundred and twenty-five, the Legislature of Maryland passed an Act reciting and setting forth in full the Virginia Act and confirming it, but at the same time declaring that it was not intended by the Legislature of Maryland to deny to Congress the constitutional power to legislate on the subject of roads and canals. On the third of March, eighteen hundred and twenty-five, the Congress of the United States ratified and confirmed the Act of the Virginia Legislature.

The application to Pennsylvania was twice rejected, but finally on February the ninth, eighteen hundred and twenty-six, a confirmatory Act was passed. Various other Acts were procured numbering sixteen with those already mentioned. The legislative history of the company is traced step by step in the lucid and exhaustive opinion delivered by Chief Justice Buchanan in Canal Co. v. Railroad Co., 4 G. & J. 1 . Thus the Chesapeake and Ohio Canal Company stood incorporated by three sovereign States and by ⁶⁰⁰ the Federal Government-—the outgrowth of their concurrent action—and on the fourth day of July, eighteen hundred and twenty-eight, John Quincy Adams, then the Chief Magistrate of the Republic, in the presence of a vast and enthusiastic concourse of citizens, dug the first spadeful of earth from the site located for the channel of the canal.

The capital stock of the company consisted of six millions of dollars, with power of future enlargement, and authority was given to take payment of subscriptions in the certificates of the stock of the Potomac Company, not exceeding the sum of $311,111.11, and in claims held by creditors of that company, not exceeding $175,000, and on the fifteenth day of August, eighteen hundred and twenty-eight, the Potomac Company, by deed duly executed and under authority duly obtained, surrendered to the Chesapeake and Ohio Canal Company its charter and all its property, rights and franchises, and thenceforth ceased to exist as a separate entity. The powers acquired by the Chesapeake and Ohio Canal Company, under its charter and in virtue of the surrender made to it by the Potomac Company, were large and liberal and the duration of its existence was without limit. Its objects were more than merely local in their character, for, besides stimulating the development of the coal fields of Allegany and throwing open a means of transportation for the products of a vast agricultural region, it was, as declared in the preamble to its charter, designed “ to establish a connected navigation between the eastern and western waters, so as to extend and multiply the means and facilities of internal commerce and personal intercourse between the two great sections of the United States ; and to interweave more closely all the mutual interests and affections, that are calculated to perfect the vital principle of union.” And President Monroe, in his annual message to Congress on December the second, 1823, adverted to the projected measure as one intended to connect “the Atlantic with the western country in a line passing through the seat of the national government,” which “ would contribute essentially to strengthen the bond of union itself.” ⁶⁰¹ With these extensive objects in view and to perfect the organization of this great undertaking, the Legislature of Maryland, at the December session of 1825, passed an Act authorizing a subscription to the company’s capital stock to the full amount of stock owned by the State in the Potomac Company, and of the debts due to the State by the same company and in addition a half million of dollars payable in current money. Under an Act of Congress approved May the twenty-fourth, 1828, the general government subscribed one million of dollars to the capital stock; and by another Act passed the same day Congress authorized the cities of Washington, Georgetown and Alexandria to subscribe to the stock.

Accordingly Washington City subscribed one million and Georgetown and Alexandria each a quarter of a million of dollars. Subsequently the general government liquidated the bonds issued by these cities to pay their respective subscriptions, and became in eighteen hundred and thirty-six possessed of their shares of stock. Besides these subscriptions the corporation of Shephardstown took twenty shares of the par value of two thousand dollars, and individuals subscribed for 6,074 shares of the par value of $607,400. In February, eighteen hundred and thirty-three, the State of Virginia subscribed for two hundred and fifty thousand dollars of the company’s stock.

On the fourteenth of March, eighteen hundred and thirty-four the State of Maryland subscribed for one hundred and thirty-five thousand dollars of additional stock, payable in five per cent, bonds of the State. The total stock subscriptions up to this period aggregated $3,984,400, with the controlling interest in the general government and the city of Washington. Up to June, eighteen hundred and thirty-four, $4,062,991.25 had been expended, and though scrip, supported by pledges of stock, had been resorted to for raising additional funds, the company was without sufficient means to open navigation beyond a point one hundred and seven miles west of Georgetown, and only eighty-six miles of this distance had been actually finished. Seventy-eight ⁶⁰² miles of the work, extending eastward from Cumberland, and covering some of the heaviest sections between Georgetown and Cumberland, remained untouched.

In its straightened condition resort was again had to public meetings, and committees were appointed to memorialize Congress, and the Legislatures of Maryland, Virginia and Pennsylvania, and the corporate authorities of Baltimore City, for the necessary means to complete the work to Cumberland. When it became apparent that aid could be expected from no other quarter, and that the burden of providing for the completion of the canal had fallen on Maryland, her Legislature promptly met the emergency, and on the eighteenth of March, 1835, passed an Act—Acts of 1834, ch. 241— appropriating two millions of dollars for the completion of the canal, that being the estimated amount required to finish •the work. This aid was not given as on previous occasions, by way of a subscription to the capital stock, but was put in the form of a loan by the State to the company, coupled with a requirement that a mortgage be executed on the whole of the net revenues, lands, property and water-rights of the company to secure the repayment of the loan and the quarterly interest to accrue thereon. On April the twenty-thii;d, 1835, the mortgage was executed.

Up to the passage of this Act the total amount invested by the State in the canal was, apart from, the sum represented by the Potomac Company’s stock and debts, but six hundred and twenty-five thousand dollars, and the whole funded debt of Maryland was something less than two millions of dollars. Her credit was high and the stock issued by her to raise the two millions for the loan was sold by the State Treasurer for $ 116.40. The aid thus furnished fell far short of completing the work, and consequently, at the next session of the General Assembly, additional help was solicited. After many vicisitudes an Act was passed on May the twenty-eighth, 1836—it being ch. 395 of the Acts of 1835, and known as the eight million bill.

It authorized subscriptions to the capital stock of several internal improve ⁶⁰³ ment companies, including the Baltimore and Ohio Railroad Company and the canal company. The amount directed to be subscribed to the latter was three millions of dollars, coupled with a requirement that a written instrument should be given to the State guaranteeing a dividend of six per cent, after the expiration of three years, to be paid out of the net profits of the canal and its works. The aid thus given was in the form of a subscription to the capital stock and secured to the State from thenceforth, as the majority stockholder, the control and government of the company. Owing to the financial embarrassments which then affected the money markets of Piurope and America, and the suspension of specie payments by the New York banks in May, 1837, quickly followed by the other banks throughout the country, it was found impossible to float the bonds of the State at the high premium fixed by the Act of 1835, and hence, under joint resolutions passed by the Legislature of 1837, but two million five hundred thousand dollars in bonds were turned over to the canal company in full of the three million subscription, and five hundred thousand dollars of the bonds were retained by the State Treasurer.

The bonds delivered to the canal company in payment of the State’s subscription were hypothecated for loans by the company and by this means the work on the canal was measurably kept up. By the Act of 1838, ch. 386, three million two hundred thousand of five per cent, sterling bonds were authorized to be issued by the State Treasurer in exchange for the two million five hundred thousand dollars of six per cent, certificates or bonds, delivered to the company under the Act of 1835, and the five hundred thousand dollars of bonds retained by the State Treasurer. By another Act of the same session, ch. 396, a further subscription by the State to the capital stock of the company to the amount of one million three hundred and seventy-five thousand dollars, payable in five per cent, sterling bonds, was authorized. This Act, like the Act of 1835, required a guaranty of six per cent, dividends on the stock ⁶⁰⁴ subscribed, payable out of the net profits of the work, after the expiration of three years.

This was the last subscription ever made to the stock of the canal company. The total amount of all the stock ever subscribed was $8,359,400 and of this aggregate the State of Maryland took and became the owner of five million. At the December session of 1839, another application was made by the company to the Legislature for aid ; but without success. In the meantime the financial affairs of the company were growing desperate.

The bonds issued by the State to the company, in payment of the State’s subscriptions, were disposed of at forced sales ; scrip was issued, without any provision being made for its redemption, and was actually received in payment for tolls ; by which ruinous methods the company was compelled to submit to heavy .sacrifices, and was deprived of much of the available means upon which alone it could rely for keeping the canal in operation. At the extra session of 1841, and at the regular December session of the same year, renewed applications were made to the General Assembly for aid, but without avail, and by the close of the year 1841 there was not a solitary laborer employed between Dam No. 6 and Cumberland, nor was work again resumed until some considerable time after the passage of the Act of 1844, ch.' 281, under which were issued the bonds held by the persons for whom the appellees are the trustees; and these are the bonds now claimed to have priority over the liens of the State. In August, 1843, General James M. Coale was elected president of the canal company, and under his wise, broad and sagacious management the work was completed to Cumberland in October, 1850. At the period of his election the company had reached its lowest depth of depression.

It was utterly overwhelmed with difficulties, was without means and without credit; and, in addition to its enormous liabilities to the State, it was beset and borne down with debts and obligations evidenced by scrip, certificates of debt, ordinary bonds and open accounts stated ⁶⁰⁵ by the treasurer on October the first, 1843, to aggregate $1,174,566.31. Assistance, though sought in all directions, could be obtained from no quarter whatever, and the company was powerless to extricate itself, and ,had nothing to depend on to sustain its feeble existence but the small annual revenues derived from tolls and water rents collected between Georgetown and Dam No. 6. At this critical period of its history a special report prepared by General Coale and submitted to the stockholders on November the sixteenth, 1843, suggested the feasibility of procuring legislation from the General Assembly, waiving the State’s liens under her mortgages, and authorizing the company to issue its own bonds to the extent of two millions of dollars with preferred liens on the tolls and revenues. It was then estimated that it would require $1,545,000 to complete the canal from Dam No. 6 to Cumberland.

I quote from the special report of November 16th, as follows: “In order, however, to give full strength to the credit of the company, so as to enable it to procure the required sum upon fair and advantageous terms, it will be indispensibly necessary to waive the State liens to a much larger amount, so that a broad and tangible basis may be presented for the bonds to rest upon. ***** The better fortified the bonds are, the greater will be their value; and as no more will be issued than will be necessary to finish the work and pay the interest on the cost thereof, in aid of the nett tolls of the canal, until they become sufficient for the purpose, together with the small outlay for repairs and improvements on the finished portion of the line, it will be the interest of the State to leave a broad margin to the credit of the company. With this view and to provide against all contingencies, we would recommend a waiver of the State liens to such amount as may be found necessary for those purposes, not exceeding the sum of two millions of dollars.” (Page 15 Report). But the Legislature of 1843 adjourned without acting on this suggestion. It was renewed at the next session, and after a long and arduous struggle led by William Cost Johnson ⁶⁰⁶ of Frederick County, in the House of Delegates, the Act waiving the liens of the State was passed, and under that Act the canal was ultimately completed to Cumberland.

The Act to which I refer is the Act of 1844, ch. 281, and it was passed on March the tenth, 1845, the last day of the session. Upon its terms and provisions, interpreted in the light of the events that preceded, surrounded and influenced its adoption, and upon the terms of the mortgages made in pursuance of it, turns the question whether the bonds which it authorized to be issued have a lien that is prior to the liens held by the State on the canal, or on the proceeds of a sale of the canal should the canal be sold. I have sketched this imperfect outline of some of the events in the canal’s history that the inquirer of to-day might be placed in possession of the facts which were familiar to the persons who procured this legislation and who made the mortgages to the State and in behalf of the bondholders; and being thus placed that he may look at the question of priorities from the same standpoint, as nearly as may be, that they occupied. By the first section of the Act of 1844 the canal company was authorized and empowered “ to borrow or raise upon the bonds of the said company, with preferred liens on its revenues as hereinafter mentioned, to secure the payment of the same and the interest to accrue thereon, such sum or sums of money as may be required to pay for the completion of the Chesapeake and Ohio Canal to Cumberland,” ***** provided that the whole amount of bonds authorized to be issued shall not exceed the sum of one million seven hundred thousand dollars.

The second section, after prescribing the denominations of the bonds and the mode of attestation, provided, “ and the said bonds so issued as aforesaid shall appear on the face of the same to be preferred liens on the revenues of the company and * * * * shall be preferred liens on the revenues and tolls that may accrue to the said company from the entire and every part of the canal and its works between Georgetown and Cumberland, which are hereby pledged and ap ⁶⁰⁷ propriated to the payment of the same and the interest to accrue thereon; * * * * provided the president and directors shall have the power to use and apply such portion of said revenues and tolls as in their opinion may be necessary to put and keep the canal in good condition and ■repair for transportation, &c.” By the fourth section it was enacted “ That the rights and liens of this State upon the revenues of the Chesapeake and Ohio Canal Company shall be held and considered as waived, deferred and postponed in favor of the bonds that may be issued under the aforegoing sections, so as to make the said bonds and the interest to accrue thereon preferred and absolute liens on said revenues, according to the provisions of the second section of this Act, until said bonds and interest shall be fully paid." And by section seven it was provided “ That the Chesapeake and Ohio Canal Company shall execute to this State and deliver to the treasurer of the Western Shore of Maryland a further mortgage on the said canal, its lands, tolls and revenues, subject to the liens and pledges by the aforegoing provisions of this Act made, created or authorized, as an additional security for the payment of the loan made by this State to the said company under the Act of December session, 1834, ch. 241, and the interest due and in arrear and which hereafter may accrue thereon.” Prior to the year eighteen hundred and forty-five the power of the company to borrow money had been gravely questioned and the validity of its mortgages to the State securing the two million loan had been seriously doubted; but by an amendment to the charter passed by Virginia on January the twentieth, 1844, confirmed by Maryland on P’ebruary the eighth of the same year and ratified and assented to by Congress on P’ebruary the seventh, 1845, all questions and doubts on this subject were finally set at rest. After the conditions upon which the effectiveness of the Act of 1844, ch. 281, was made to depend had been fully complied with and a contract for the completion of the canal had been executed, the bonds were issued in payment for ⁶⁰⁸ the work done as it progressed, and they subsequently found their way into the hands of the present holders. But for these bonds the canal would not, it may fairly be assumed, have been completed at all, and the State’s large interest, then amounting, with accrued interest added, to nearly eleven millions of dollars, would, in all probability, have been lost half a century ago. Before the bonds were all issued a mortgage to the State, drawn under the seventh section of the Act of 1844 was executed.

It bears date January 6th, 1846, and after reciting the several provisions of the Act, conveyed in mortgage the lands, tenements, revenues, tolls and property of the canal to the State, “ Subject, nevertheless, to all and singular the liens and pledges by the provisions of the before mentioned Act of 1844, ch. 281, made, created or authorized, or that have been or may hereafter be made, created, given or granted by the said •Chesapeake and Ohio Canal Company or the President and Directors thereof, under or in pursuance of the provisions of said Act, which said liens and pledges are in no wise to be lessened, impaired or interfered with by this deed or by anything herein contained, and subject also to all the other provisions of said Act.” The mortgage securing the bonds issued under the Act of 1844 was executed to named trustees on June 5th, 1848,' and conveyed the l'evenues and tolls of the entire and eveiy part of the canal and its works between Georgetown and Cumberland in fee and in moi-tgage, to secure the payment of the interest on the bonds and ultimately the principal of the bonds themselves. And it was fux-ther provided, that if the company failed to pay the interest as it fell due and failed to provide a sinking fund for the redemption of the bonds at their matuxdty from any cause, except a deficiency of revemie arising from a failure of business without fault on the part of said company—the fault to be made to appear by the grantees—the grantees might demand and take possession of the canal and appropriate the tolls and revenues in the manner provided in antecedent clauses. ⁶⁰⁹ Now, the statutory lien created by the Act of 1844, and reiterated in the mortgage of 1848, was a preferred lien on the revenues and tolls that might accrue from the entire and every part of the canal and its lands between Georgetown and Cumberland ; and those revenues and tolls—that is, the ■whole and entire, and not merely the nett, revenues and tolls—were pledged and appropriated to the payment of the bonds and the interest thereon, though the right was reserved to the company by the second proviso in the second section to apply such portions of these same revenues and tolls as might be necessary to keep the canal in condition for transportation. The mortgage of 1848 “doth give, grant, bargain, sell and convey ” to the named trustees " the revenues and tolls of the entire and every part of the canal and its works between Cumberland and Georgetown.” What estate or interest, then, was pledged; or upon what estate and interest did the lien fasten ? “ It is an establised rule,” said Lord Chief Justice Tenter den, “that a devise of the rents and profits is a devise of the land.” Doc, &c., v. Lakeman, 2 B. & Ad. 42. And in Washburn on Real Property, it is laid down with respect to grants that it is not “necessary that the deed should in terms convey the land or thing intended' to be granted, if such grant is implied from what is described.

Thus a grant of the rents, issues, and profits of a tract of land is the grant of the land itself. If the grant be of the uses of and dominion over land, it carries the land itself.” Vol. 3, ch. 5, sec. 4, placitum, 23. “ A devise of the rents and profits or of the income of lands passes the land itself both at law and in equity; a rule, it is said, founded on the feudal law, according to which the whole beneficial interest in the land consisted in the right to take the rents and profits.” 2 Jar. on Wills (5 Am. ed.), 403. Lord Cranworth, in Blann v. Bell, 2 De G. M. & G. 781. “ But if a man seized of lands in fee, by his deed granted to another the profits of those lands, to have and to hold to him and his heirs, and maketh livery, secundum forman charlee, the whole land itself doth ⁶¹⁰ pass ; for what is the land but the profits thereof; for thereby vesture, herbage, trees, mines and all whatsoever, parcel of that land doth pass.” Co. on Lit., 4 b, vol. 1, star page 200. To the same effect, Johnson v. Safe Dep. & T. Co., 79 Md. 18 ; Cassely v. Meyer, 4 Md. 11 ; Reed v. Reed, 9 Mass. 372 ; Blanchard v. Blanchard, 1 Allen, 225 ; 29 Am. & Eng.

Encyclo. Law, 404, and the numerous cases collected in note 1. See also Pollock v. The Farmers' Loan & Trust Co., 157 U. S. 429 , and particularly the opinion of Mr. Justice Field ; wherein, after quoting from Washburn, Jarman, Coke, Lord Tenterden, Lord Chancellor Hardwicke, and after referring to many adjudged cases, he observes : “ Similar adjudications might be repeated almost indefinitely. One may have the reports of the English Courts examined for several centuries without finding a single decision or even a dictum of their Judges in conflict with them.” And in the brief of Mr. Joseph H. Choate, filed on the reargument of Pollock v. Trust Co., 158 U. S. 601 , many authorities to the same point are cited.

The case of Southeastern Ry. Co. v. Jortin, 6 H. L. cases, 424, is strikingly analogous. Obviously, then, according to this firmly settled and long established doctrine, the pledge, by the statute of 1844 and by the mortgage'of 1848, of the whole and entire revenues and tolls, was a pledge or mortgage of that out of which the revenues and tolls issued or were to issue; that is, the canal, the land, the works, the physical structure ; and as the State waived, deferred and postponed its prior liens to let in this pledge as a preferred and absolute lien, this lien took precedence over the others and became, by virtue of the State’s own deliberate and solemn act, the first and predominant lien upon the whole and entire canal. The right to the rents and profits of land involves and carries with it all the beneficial interest of every kind which can possibly exist in- the land ; and hence, when there has been granted to one person all the revenues derivable from land, there is, of necessity, no beneficial interest of any kind left in that particular land for any one else.

Consequently, when the State with outstand ⁶¹¹ ing mortgages on the land, the property and the revenues of the canal company, with a view of enabling the great work to be completed, so that the vast amount invested by her in its construction might yield her treasury some return, unequivocally declared by the Act of 1844 that she thereby waived, deferred and postponed all her rights and liens upon all the revenues of the company in favor of the bonds to be issued under the same Act of Assembly ; and when she further declared that those bonds should be preferred and absolute liens on these same revenues until the bonds and the interest thereon were fully paid, she necessarily and in unmistakable terms proclaimed that whilst those bonds were unpaid she would and could have no beneficial interest whatever in, 01-right to, the property out of rvhich those very revenues, so pledged, were to issue. This is inevitably true unless the grant of the rents and profits of land does not carry the land. The seventh section of the Act of 1844 strengthens this conclusion. Doubts having arisen as to the validity of the State’s mortgage made in 1835, to secure the two millions loan under the Act of 1834, ch. 241, as already stated, the seventh section of the Act of 1844 provided that the canal company should, as additional security for the payment of that loan, execute to the State a further “mortgage on the said canal, its lands, tolls and revenues, subject to the liens and pledges by the aforegoing provisions of this Act made, created or authorized, &c.” By the terms of this section the mortgage to the State on the canal, its lands, tolls and revenues was to be subject to the liens made, created and" authorized in favor of the bonds of 1844 ; and if the State’s, mortgage on the canal and its lands rvas to be subject to the lien of these bonds, the lien of the bonds must of necessity have been considered and intended to be a lien on the canal and its lands, by reason of being the first and preferred lien on the revenues and tolls that issued and were to issue from and out of the same canal and its lands.

It was not possible for the State’s mortgage on the canal and its lands to be in' law or in fact subject to the lien of the bonds, if the lien of ⁶¹² the bonds was not a prior lien on the canal and its lands. This provision of the Act of 1844 is an express declaration that the lien of the State on the canal and its lands—on the physical structure as well as on the revenues and tolls—was designed to be subject, that is, subordinate to the lien of the bonds of 1844; but how could the State’s mortgage be subject or subordinate to the lien of those bonds as respects the physical structure, if the bonds were not° liens on the same physical structure at all, and the State’s mortgages were a first and only lien on the canal and its lands apart from the. revenues and tolls. The bare fact that the State’s mortgage on the canal and its lands is expressly declared to be secondary to the bondholder’s lien is equivalent to a declaration that the latter lien is a prior lien on the very things on which the State’s morfgage is made a secondary or subordinate lien. By providing that the pledge made to the State should be subject or subordinate to the pledge made to the bondholders, the State in express terms affirmed that the thing—the property—she claimed a lien on, was already included in an antecedent or prior lien; and being so included, was included by virtue of the language used in the creation of that antecedent lien; because' for one lien to be subject to another lien, the latter must, in the nature of things, be prior to it and upon the same property.

If one lien be upon one piece of property and another lien be upon a different parcel, though both properties be owned by the same individual, neither lien can be said to be subject to the other; but when both are on the same estate or thing and they are not coincident in date or contemporaneous, one must be subject to the other. Had the Legislature designed to distinguish between a lien on the revenues and tolls as a separate thing from that which has been called the corpus of the canal, it would assuredly have said that the lien of the State should be subject to the lien of the bondholders in so far as the revenues and tolls were concerned, instead of employing , the broad and comprehensive language which was used in the second and seventh sections of the Act of 1844. ⁶¹³ Whilst it was conceded on behalf of the State that as a general rule the grant of the rents and profits will carry the' land out of which they issue, yet, it was insisted that there were exceptions to the doctrine. It was accordingly contended that whenever it distinctly appears there was no intention to grant more than the rents and profits, nothing but the rents and profits will pass. And it has been further maintained that in the case at bar it was the evident design of the Act of 1844, and of the parties to the contract which its terms contain, to grant no lien to the bondholders except a lien on the revenues and tolls, reserving to the State a separate, distinct and paramount lien on the property out of which those revenues and tolls were to issue.

I admit it has been held that though ordinarily, the devise of the rents and profits will pass the real estate absolutely, yet such construction will not obtain when the intention of the testator appears from the whole will to be different. Cooke v. Husbands, 11 Md. 492 ; Magruder v. Peter, 4 G. & J. 323 . I do not understand these cases to be in conflict with those hereinbefore cited. The question is one of intention and the grant of the rents and profits is held to be sufficient to carry the estate, because by granting them the intention to convey the estate is manifested unless the instrument making the grant or devise shows a different purpose on the part of the testator, if there be a will, or on the part of the contracting parties, if there be a conveyance or other like instrument to be interpreted.

But I am wholly unable to perceive how it can be maintained that the design of the Act of 1844, and the intention of the parties to the contract, which its provisions embrace, manifest a purpose to restrict the pledge of the revenues and tolls to the revenues and tolls alone, and to exclude the