Gibbes v. G. & C. Railroad

13 S.C. 228 | S.C. | 1880

The opinion of the court was delivered by

McGowan, A. J.

It will contribute to a clear understanding of these cases to make a short statement of facts out of which the-questions arise.

The Greenville and Columbia Railroad Company was incorporated by acts of the general assembly in 1845-6 and 1849, for the purpose of building a railroad from Columbia to Greenville,, with branches to Abbeville and Anderson. In 1854 the company executed a mortgage to Charles M. Furman, Esq., trustee,, of their entire railroad, including “ the bed and superstructure, the materials used in the construction, the iron, stations, station-houses, depots, fixtures, workshops and machinery, rolling stock and all the land and real estate belonging to said company,” with two inconsiderable exceptions, not important here, to secure bonds of the company which had been and were about to be issued, to the amount of $800,000, for the purpose of completing the road.

In 1861 these bonds, secured as aforesaid, were about to fall due, viz., in 1862,1863 and 1864. At maturity they might be sued, and the company desired further time. They also desired that the state, which was a large stockholder, should in some way contribute an equivalent for the assessment which had been exacted from the private stockholders, and the following scheme was adopted: The property of the company was improved in value since the mortgage was executed, and the debt was enlarged. by over $100,000, and the time for payment was extended twenty years upon the whole $900,000, which was to be secured by the guaranty of the state, and another lien to be declared by statute to the state in substitution of the first mortgage. The mortgage was to be taken up and the statutory lien become the first. To accomplish these purposes was passed the act of January 28th, 1861, entitled “An act to lend the name and credit of the state to the Greenville and Columbia Bailroad Company, in relation to the re-adjustment of their debt.” 12 Siat. 885. This act authorized the comptroller-general to endorse bonds of the company to the amount of $900,000, and declared “ that as soon as the comptroller-general shall have made any such endorsement -on any bond, the whole estate, property and funds within the state which the said company may then possess or shall after-wards acquire, shall thenceforth stand pledged and mortgaged to the state, without any further act or deed- on the part of the company, for the faithful and punctual performance on the part of the said company of such contract, and the payment of such obligation in priority and preference of any other debt which the said company may then or any other time owe, except the bond debt now secured by mortgage, which shall enure to the benefit of the state, as hereinafter provided,” &c. These endorsed bonds were not to be used by the company for any other purpose than for “ funding the debt of $100,000 now due by the company on notes and accounts, and of taking up the bonds of the company already issued and now secured by mortgage,” &c. At that time the war was going on, and the transfer of the mortgage debt to the statutory lien went on slowly. Part of the mortgage bonds were never exchanged, and the $700,000 which were issued under the act bore date during the war, and were entitled “ Confederate States of America.”

In 1866 the war was over, but, as there might be difficulty about the bonds which had been issued during the war, it was determined to re-issue them with another caption • to renew the authority contained in the act of 1861 for issuing the $200,000 which had not been issued, and to put into the form of certificates of indebtedness the interest which had accrued, amounting to $350,000. To accomplish these purposes the act of 1866 was passed, and thus far the act was substantially a re-enactment of that of 1861, adding nothing to the debt • for the lien was originally for $900,000, as well as the interest which might accrue. But the company had incurred new debts to the extent of $600,-000, and the occasion of the passage of this act was taken to make a provision for funding that debt by a compromise of one for three. To do this required $250,000, and, by the fifth section •of the act, certificates of indebtedness to that amount were authorized and guaranteed. The act did not assume to create any new statutory lien, but to re-enact and extend that of 1861 so as to cover the whole issue originally authorized and interest, and also the new element of $250,000, and was entitled “ An act to alter and amend an act to lend the name and credit of the state to the Greenville and Columbia Railroad Company in the re-adjustment of their debt.” 13 Stat. 395, 427.

In 1867, the company executed a second mortgage of their entire road and property to Cyrus D. Melton, Esq., as trustee, to secure other bonds of the company to the extent of '$1,500,000. The state neither authorized her guaranty nor declared a statutory lien to secure these bonds. The mortgage itself, after reciting the first mortgage, the guaranty of the state and the statutory lien arising therefrom, declares, in terms that the mortgage “is to be subject to the first mortgage and the statutory lien aforesaid.” [See mortgage.]

In 1868, the convention which framed the constitution passed an ordinance which declared “suspended and inoperative, until ratified by the general assembly, all acts, or pretended acts of 'legislation purporting to have been passed by the general assembly of the state since December 20th, 1860, pledging the faith and credit of the state in aid of corporations, &e. 14 Stat. {Ordinances,) 35.

In 1869, the legislature, upon condition that the company would release its right of exemption from taxation, re-enacted the act of 1866, and a further endorsement of bonds to the amount of $50,000 was authorized to be applied to take up the interest of the mortgage and guaranteed debt becoming due from January 1st, to July 1st, 1868. 14 Stat. 183.

In 1870, under “An act to provide a sinking fund and the management of the same,” the controling interest owned by the state in the stock of the company was sold, and shortly after a new board of directors assumed. control of the affairs of the-company, and, it is alleged, issued a large amount of guaranteed bonds without complying with the terms and conditions imposed by law. 14 Stat. 388.

In 1871, the legislature passed an act entitled “ An act to promote the consolidation of the Greenville and Columbia Railroad Company and the Blue Ridge Railroad Company,” the fifth section of which, it is claimed, postponed all statutory liens prior to that date in favor of the second mortgage. 14 Stat. 590.

These are the acts under which this litigation arises. There is no testimony before us. The company not being able to pay all their obligations, questions of priority of lien soon arose between the holders of guaranteed bonds and the second mortgage bonds, the latter claiming that the act of 1871, last above referred to, postponed all statutory liens in favor of that of the second mortgage. The ease first stated — James S. Gibbes v. The Greenville and Columbia Railroad Company and others — was instituted in 1872 by guaranteed bondholders for themselves and other creditors to foreclose mortgages, for relief, &c. The other case mentioned was in the nature of a cross-action by the attorney-general to protect the interest of the state, foreclose mortgage, enjoin creditors, for receiver, &c.

In these cases, heard together, Judge Melton, in 1872,. appointed John S. Green, referee, enjoined the creditors of the company from suing, ordered them called in to prove their demands, and that the pleadings should be amended by making Charles M. Furman, trustee under the first mortgage, and C. D. Melton, trustee under the second mortgage, defendants. The referee called in all creditors of the company, and November, 1872, made his report showing the different classes of bonds, so far as they were presented, in their priorities, &c. In 1874, Judge Carpenter extended and enlarged the .reference. In May, 1878— C. M. Furman and C. D. Melton, both having died in the meantime — Judge Shaw ordered that the pleadings should be amended so as to make parties H. H. Be Leon, trustee, substituted for C. M. Furman, and W. A. Clark, substituted trustee for C. D. Melton. The pleadings were so amended, and the cases heard on the merits by Judge Pressley, who declared the priorities, appointed a receiver to take charge of the road, and ordered another reference. To this decision various classes of creditors have filed exceptions and the appeal comes to this court. The brief does not contain any further report from the referee or exceptions thereto. The number and amount of the different classes of bonds, or whether they were issued according to law, do not appear. This court cannot see the bearing of its judgment upon the actual facts, and can do no more than to announce the principles upon which the final report should be framed.

The cases on Circuit were fully argued, and, as the judge states, “ without any objection from any one that there was want of proper parties;” but it appears that after his decree was rendered, one Bolivar B. Furman, ex parte, filed his petition in re James S. Gibbes v. The Greenville and Columbia Railroad Company et al. claiming that as the first mortgage conveyed the property of the mortgagor to “ G. M. Furman, his heirs and assigns,” the petitioner, who is the heir of the said Furman, [we suppose eldest son] was and is invested by descent with the legal title to the property and trustee as successor, and insisting that he is a necessary party to the proceedings, and should be impleaded as a defendant. Judge Mackey, to whom the application was made, dismissed the petition, on the ground that “the petitioner has no interest in the subject matter or the issues involved.” From that order petitioner appeals, and raises the first question in the case. ■

The claim of the petitioner comes late, and is purely technical. The intention was to make C. M. Furman the depositary of a personal confidence in the nature of a passive trust; no beneficial interest or transmissible estate was conveyed to him by the mortgage, which was only a security for the bondholders. It was competent for the court, at the instance of the parties in interest, to appoint a trustee as successor of Mr. Furman. Judge Shaw appointed H. H. Be Leon, and ordered him made a party. The order dismissing the petition of Bolivar B. Furman is affirmed and the appeal therefrom dismissed. Hill on Trustees 285, 291; McNish v. Guerard, 4 Strob. Eq. 79; Devant, Trustee, v. Guerard, 1 Spear 242; Ex parte the Greenville Academies, 7 Rich. Eq. 478; Ex parte Mayrant, Rich. Eq. Cas. 1; Ex parte Knust, Bail. Eq. 489; Dean v. Landford et ux., 9 Rich. Eq. 423.

The next preliminary inquiry is, whether the ordinance of the constitutional convention passed in 1868, declaring inoperative the acts of 1861 and 1866 until re-affirmed by the act of 1869, affects,'by changing the date of lien or otherwise, the rights of the parties in these cases. It is not easy to define the powers which a convention of the people may rightfully exercise. It has been doubted whether any act of mere legislation in a state having a. constitution can be passed by a convention called for a particular and different purpose. The body is not constituted with two houses, and in other respects lacks the organization necessary for ordinary legislation. The convention of 1868 was not called for a purpose fairly embracing the subject of this ordinance, which was never submitted to the people. But from the view taken by the court upon another ground, it is not necessary to consider here the abstract question of the, power of the convention. The State, ex rel. McCrady, v. Hunt, 2 Hill 1.

It is not competent for one legislature, which is the regular law-making body, to repeal acts of a previous legislature under which private rights have vested, and, clearly, the convention had no higher power. The ordinance in this respect derives no force from the anomalous condition of the state growing out of the war. It is probable, from the time fixed from which the suspension was to’commence — “December 20th, 1860” — that the ordinance -was made on the idea that all acts of the legislature after secession were void. If so, such assumption was unfounded. Keith v. Clarke, 7 Otto 477. Private rights vested ■during the war are recognized as entitled to the protection of the constitution of the United States. A provision of the state ■constitution itself which impaired the obligation of contracts made during the war, has been declared null and void. Calhoun v. Calhoun, 2 S. C. 283; Cochran v. Darcy, 5 S. C. 125. The ordinance was and is without the force of law. So much of the act of 1869 as re-affirmed the act of 1866 was unnecessary, and the rights of the parties must be determined as if the ordinance never existed.

The most important question in the case is that made by the holders of bonds under the mortgage of 1867, known as the second mortgage. It will be remembered that, in the order of time, the date of that mortgage, and certainly of all bonds held under it, is subsequent to the statutory lien created by the act of 1861, amended by the acts of 1866 and 1869. But it is earnestly urged that the fifth section of the act of 1871 postponed the statutory lien so as to leave the mortgage of 1867 next after the first mortgage. The company only executed two mortgages; all other liens were declared by statute; and the effect of postponing the statutory liens would be to leave the mortgages standing in the order of their dates. The act of 1871 is entitled “ An act to promote the consolidation of the Greenville and Columbia Railroad Company and the Blue Ridge Railroad Company,” and sections four, five and seven bear upon the point, and are as follows:

“ Sec. 4. That in view of the consolidation of the Greenville and Columbia Railroad Company and the Blue Ridge Railroad Company, the action of the said Blue Ridge Railroad Company in making the bonds authorized under the act of September 15th, 1868, and of the comptroller-general of the state in endorsing the same, and thereby pledging the faith and funds of the state to the payment of said bonds, is hereby ratified and confirmed ; and that the making and execution by said Blue Ridge Railroad Company and said other companies of the mortgage aforesaid to Henry Clews, Henry Gourdin and George S. Cameron, to secure the payment of the bonds aforesaid, is also ratified and confirmed, and said mortgage is declared to be a lien prior to that of the state on all property described in said mortgage, and on the entire line of the road aforesaid, and on all the properties of said several companies, or which they or either of them, may hereafter acquire; but nothing in this act contained shall be construed to divest the state of its lien on the estate and property of the said several railroad companies, or of either of them, for its endorsement of the bonds aforesaid, but said lien is postponed to and declared to be subject and subordinate to that of the mortgage hereinbefore mentioned, to Henry Clews, Henry Gourdin and George S. Cameron, trustees.

“ Seo. 5. That all statutory or other liens or lien, encumbrances or encumbrance, equities or equity, except the mortgage encumbrances now upon the property, assets, effects, rights and franchises of said Greenville and Columbia Railroad Company, or any part thereof, and also except the mortgage herein authorized, shall be and are, or is hereby made subsequent to the mortgage encumbrances now in existence thereon and subsequent to the one herein authorized, so that the holders of the bonds secured by said mortgages, or either of them, shall have a lien and’ security as between each other, according to the time said mortgages have been or shall be recorded, and a prior lien to all other liens or encumbrances whatsoever, any law or laws to the contrary notwithstanding.

“Sec. 7. That after the consolidation of the Greenville and-. Columbia Railroad Company with the Blue Ridge Railroad' Company, the bonds now held by the Greenville and Columbia Railroad Company and the Blue Ridge Railroad Company, shall be endorsed by the consolidated company.”

It does not appear that this act was.ever accepted by the Greenville and Columbia Railroad Company or its creditors, or went into operation, in whole or in part. Indeed, the contrary appears. The company executed the second mortgáge, which, in its terms, recognizes as superior the first mortgage and the statutory lien. The title of the act has been stated. In the usual manner it is divided into sections, but they all relate to the one subject of the act; otherwise there would be two or more acts in one under a false name, and violating the provision of Section 20, Article II., of the constitution, which declares that “ every act or resolution having the force of law shall relate to but one subject, and that shall be expressed in the title.” But we think that all the sections of this act, properly construed, have reference to the subject expressed in the title. The fourth section provides for the waiver of a statutory lien on the Blue Ridge railroad, the property of one of the companies to be consolidated. The fifth section provides for the waiver of the statutory lien on the Greenville and Columbia railroad, the property of the other company being prepared for consolidation. The seventh section provides that “ after the consolidation the bonds now held by the Greenville and Columbia Railroad Company and the Blue Ridge Railroad Company shall be endorsed by the consolidated company.” Are these sections each an act independent of the others; or all parts of one whole? The object as stated, and as appears from the act itself, was to consolidate the two companies. Considered in reference to its purpose, the act is a unity with several •parts. Each section brings its contribution to the end in view. If the taking effect of the charter of the consolidated company and its endorsement of the bonds are not technically conditions precedent to the waiver of the lien, they are provided for by the same act and are parts of one plan, and must stand towards each •other in the relation of mutual and dependent provisions. In the order of time, of course, the companies had to be consolidated before such consolidated company could endorse the bonds; but is it not apparent that the endorsement, though later in the order of time, was to be the counterpart and consideration of the waiver ? The fact that the parts are in different sections does not .alter the case. The division into sections is purely arbitrary. ■Part of an act, isolated and disconnected from the context, may defeat instead of give effect to the intention of the law-maker. The fifth section of the act of 1871, which was inserted as part of a plan to consolidate the two companies, cannot, after that purpose has failed, be enforced for the sole and different purpose of effecting priorities in one of said companies. The object of the act having failed, each and all of its parts also fail.

But if the fifth section of the act of 1871 is to be considered as a law in itself, independent of the other sections and the purposes of the act, was it within the power of the legislature to pass such a law? We need not repeat what we have said upon the subject of the infringement of rights through the forms of law in connection with the ordinance of the convention. It has, however, been earnestly and ably argued that these bondholders contracted for no other security than the obligations of the company .and the guaranty of the state; that they will still have that if the lien is postponed; that they never had any vested interest-under the statutory lien, which was a collateral indemnity created by the state for the sole purpose of securing herself, and, as it was a creature of the state, solely to indemnify the state against loss on the guaranty, the state could waive or relinquish it at her pleasure. The principle contended for is that a security given for the protection of the surety may be waived by him, and the creditor has no such interest in the transaction that can supply the want of privity of contract.

"We consider that the principle, as stated, has no application to this case, and might be admitted without affecting the result here. It will presently appear that the statutory lien in this case was not given exclusively for the indemnity of the guarantor, but to secure the payment of the debt. The general rule undoubtedly is : That when the principal debtor has given the surety a security against his liability, the creditor is entitled to the benefit of the security. 1 Lead. Cas. Eq. 196; Homer v. Bank, 7 Conn. 483; Jones v. Quinnipiack Bank, 29 Conn. 25.

There are cases in which the principle may seem to be modified, but, when carefully examined, it will be found that they stand on their peculiar circumstances, as where the security was-given after the original agreement for the sole purpose of indemnifying the surety and not for the payment of the debt. The case above cited of Jones v. Bank, which, in the argument,, was relied upon by both sides, may be taken as declaring both the rule and the modification. The principles announced in. that case are the following :

“ When a mortgage is given to secure a debt, whether the debt be in a negotiable form or not, a transfer of the old debt transfers in equity the security, if the security has not previously-been surrendered by the creditor.” “ But when a mortgage is-given, not fo secure a debt, but to indemnify a security, then the security does not, in the first instance, attach to the debt, as an incident to it, but whatever equity may arise in favor of the creditor with regard to the securities arises afterwards, and comes into existence only upon the insolvency of the partiesholden for the debt.”

Apply the principles here announced to this case, and the whole point resolves itself into a question of construction: Whether the statutory lien was given to secure the debt or to indemnify the guarantor ? Did or did not the bondholders contract to secure their debt ? It seems to the court that there can be no doubt upon that point. They held a perfectly good security under the first mortgage. The state passed an act, and thereby proposed to them to exchange their mortgage security for the statutory lien. They did so, and the terms of the act. constitute a contract between the company, the bondholders and the state, as clearly as if a new mortgage had been executed by the company, and the state had guaranteed the bonds as additional security. That contract was made at the time the bonds were guaranteed, and as part of the original arrangement, and each party has a right to insist upon its terms. Was it exclusively to indemnify the state or to secure the debt to the bondholders ? It is true, it was to the state, as the first mortgage was made to C. M. Furman, but expressly and in terms to secure the payment of the debt. The act of 1861 has on the face of the covenant these words: “For the faithful performance on the part of the said company of such contract, and the payment of such obligation in priority and preference of any other debt which the said company may then, or at any other time, owe, except the bond debt noto secured by mortgage."

The act of 1866 has these words: “ That the statutory mortgage contained in the second section of the act of which this act is amendatory shall constitute a lien on all the property, &c., to secure the payment of the principal and interest of the whole debt of $1,500,000 thus guaranteed in the adjustment of the original mortgage and guaranteed debt of said company, also the debt of $600;000 and interest thereon, which is now secured by mortgage.” And the act of 1869 declares “that the statutory lien is hereby extended to cover the additional sum of $50,000 herein provided,” &c.

Can there be any doubt, from the terms of these acts, that the ■ statutory mortgage was not given exclusively to indemnify the state as guarantor, but, in express terms, to secure the debt to the creditor ? This subject has lately received exhaustive consideration by this court in the case of Hand v. Savannah and Charleston Railroad Company, 12 S. C. 314, audit is quite unnnecesary to say more than to repeat the words of Chief Justice Willard, as the organ of this court in that case, in which the facts were less plain than they are in this :

“ In all these cases the intention is clearly expressed that the security taken shall be for the payment of the bonds. It is in no case said that it is taken for the special indemnity of the state as endorser. That is undoubtedly implied, but the direct provision is for the payment of .the bonds. A provision for the payment of the bonds is primarily a security for those holding the bonds. It is always so in equity, and at law when its forms permit it.” (P. 342.) “The foregoing conclusions establish the proposition that the bond and coupon holders took a mortgage or lien upon all the property of the old company intended by that act to be subjected to such mortgage or lien, which the legislature had no right to destroy or postpone, as such attempt was in violation of the provisions of the constitution of the United States and of this state forbidding the passage of a law impairing the obligation of a contract.” (P. 356.)

The next question is as to relative priorities of the different classes of bonds guaranteed by the state and held under the first mortgage. It is not questioned by any of the parties that the first mortgage of 1854 is the first lien upon the property of the company to the extent of the bonds that have never been exchanged, but are still outstanding in their original form. But it is not conceded that this is true of that portion of those bonds which were exchanged for guaranteed bonds, and are now in the possession of the state. It is insisted that the state, having guaranteed other bonds issued by the company in lieu of them, which substituted bonds are interest-bearing obligations, that the bonds in the possession of the state, are, in effect, paid, and should be regarded as either canceled or held as cumulative security for a particular class of the guaranteed bonds. The statutory lien was intended as a substitute for the first mortgage, and if all the bonds had passed under the statutory lien, the first mortgage would have become “fwnctus officio,” and the statutory lien taken its place as the first, and, in that event, the bonds received in exchange would have died with the mortgage. The ■exchange, however, was not made of the whole, but only of part. At first view it would seem that the same result should follow as to the part exchanged, and that the bonds taken up ■should be regarded “pro tanto ” paid, and the mortgage canceled, except so far as was necessary to cover the bonds still outstanding. On the other hand, there may have been good reasons for keeping alive the lien of these transferred bonds under the mortgage until the whole amount was transferred. But be that as it may, the words of the act are too plain and explicit to admit the view that they are to be considered paid. The act declares expressly that the bonds thus taken up and deposited with the “ president of the bank shall stand as security to the state, and thereby give the state the lien under the first mortgage until all the bonds now secured by mortgage shall be retired.” All the bonds secured by mortgage have not yet been retired, and we cannot declare a result directly in the face of the act. It is not conceived that the outstanding mortgage bondholders have any ¡right to complain of this. They accepted the mortgage security, knowing that it covered the whole $800,000, and there is little equity in the claim that as each bond passed from under the mortgage the value of the mortgage to that extent must be enhanced for their benefit. All the bondholders had the right to stand still as those outstanding have done. It is the same to them whether the state holds them or the original owners.

Accepting this view, it is insisted in the next place that at least no interest should run on the bonds held by the state until after the company ceased to pay interest on the guaranteed bonds substituted for them; otherwise, it is said, the company pays interest twice on the same debt — on the bonds held by the state, and also on the guaranteed bonds given in exchange for them. This would be true if the bonds tranferred to the state had been directly for the benefit of the holders of the guaranteed bonds as cumulative security. In that case the payment of one security would discharge the other pro tanto. But these are not double securities to the same creditor. The parties were competent and they have made this arrangement. The guaranty and the statutory lien stand as the security of the bondholder, and these mortgage bonds are the security of the state for its liability as guarantor.

Interest is only the legal accretions of the principal and. becomes part of the debt. The security of the transferred bonds and interest not being to the same creditor, is unaffected by payments on the guaranteed bonds, but is affected by its character, as an indemnity, and as soon as the guaranteed debt is paid, and the state saved harmless, its functions, as a guaranty, will have been accomplished, and the excess, if any, fall into the assets of the company. It may be remarked, in passing, that this claim of the state, under the first mortgage, is primarily an indemnity to the state as guarantor, rather than a direct security to the' bondholders for their debt, and in this regard differs from the security of the statutory lien, which, as we have seen, is a security primarily for the creditor. Being an indemnity, it may be that this security of the state, according to the principle so strongly urged upon the court, might be relinquished or waived by the state, but the claim is as a bondholder under the first mortgage, which is expressly excepted from the operation of the fifth section of the act of 1871, in regard to waiver.

It only remains to consider the relative priorities as between the bonds issued under the acts of 1861, 1866 and 1869. The court is not informed whether there are any bonds still outstanding, issued under the act of 1861, and still having the caption of “ The Confederate States of America.” If there are any such, they are unaffected by the provisions of the acts subsequently passed, the terms of which they have not, directly or indirectly, accepted, and must rank next after the first mortgage bonds as the first class of guaranteed bonds.

The act of 1866 did not assume to create a new statutory lien, but to re-affirm and extend that of 1861. It did, however, enlarge the amount of bonds authorized to be issued from $900,000 to $1,500,000 — a difference of $600,000; but of this apparent enlargement $350,000 are for interest which had accrued, and which, in fact, was part of the old debt, so that to the amount of $1,250,000 the act of 1866 was substantially a substitute for the act of 1861. If the interest had not been represented by certificates of indebtedness, the debt and interest, which were already under the mortgage and statutory lien, would have amounted to-this statutory sum. But the fourth section of the act of 1866-did provide for another issue of bonds and certificates of indebtedness, to the amount of $250,000, to fund the floating debt of $600,000, by a compromise of one for three. To this extent a new debt was incorporated and the old lien of 1861 extended over it. It is argued that this was a wrong done to holders of bonds issued under the act of 1861 and re-issued under the act of 1866-—the $700,000 confederate bonds; that the legislature cannot extend the lien which belonged exclusively to them over an increased debt, and thus impair the value of their security; that to extend an old lien over a new debt, is, in effect, to create a new lien for the new debt, which must leave the old debt under its own lien and take its place in the order of priorities by the date-of the extending act. There is great force in this view, so far as the element of new debt is concerned, and we have already held that the bonds issued during the war under the act of 1861 and never passed under the act of 1866, must have priority and take rank from the date of the former act. But as to those bondholders who came in and accepted bonds issued under the act of 1866, we think this objection does not apply. They have accepted the advantages offered by the act of 1866, and. they must take its disadvantages. This principle of estoppel is fully developed in the case of Hand v. Railroad, before referred to. We can add nothing to what is there said also upon this point, and will not re-open the argument. The court says: “ It is too clear for argument or the citation of authorities, that one taking a provision made for himself by statute, must take upon the condition-upon which it is offered. This principle equally applies to express conditions and such as may be fairly implied from the terms of the statute.” (P. 348.)

To this it is replied that this is a different case from that of Hand. That the act of 1866 offered no valuable consideration and imposed no conditions; that it only re-issued the bonds in a different style. That the act is not a unity, but divisible, and, in fact, four different acts in one. That the first section provides-simply for the re-issue of the bonds issued under the act of 1861; that the second section only provides for the deficit under the-same act; that the third section provides for an issue of certificates to pay interest, and that the fourth section provides for a new issue to fund the floating debt. It is true that these provisions are in different sections, but they are part of one act upon the same general subject. None of the above sections re-enacts the lien; that is in still another section, the sixth, which declares that the statutory mortgage contained in the second section of the act of which this is amendatory, shall constitute a lien to secure the payment of principal and. interest of the entire debt of $1,500,000, thus guaranteed in the adjustment of the original mortgage and guaranteed debt of said company, and also the debt of $600,000 and interest thereon, which is not secured by mortgage.” The results of the war had made necessary a re-adjustment of the •debt of the company. The act of 1866 embodies a carefully prepared plan upon the whole subject, and not upon any separate part. So far as its general purpose is concerned, it is an ■entirety, and we cannot avoid the conclusion that those who accepted some of its provisions are bound by all.

The act of 1869 provides as follows: “ That to enable the said ■company to fund the interest due upon their mortgage and guaranteed debt for the six months, viz., from January 1st to July 1st, 1868, the comptroller-general is authorized and directed to ■endorse the name and credit of the state upon the bonds and certificates of indebtedness of the-said company to the amount of fifty thousand dollars, to be applied in all respects and in the same manner and with the same conditions and restrictions as is provided in the act of December 20th, 1866, for the funding of interest, and the statutory lien is hereby extended to cover the additional suin of fifty thousand dollars herein provided.”

The company and the bondholders accepted this act. The bonds and certificates of indebtedness were issued, we must suppose, in accordance with its terms, and the last question is made by W. A. Clark, trustee under the second mortgage. He insists “that, as the act of 1869 was passed after the second mortgage was executed, the $50,000 bonds issued under its provisions are subject to the lien of the second mortgage bonds.”

The Circuit judge states that “there was no proof before him as to the date of any of the second mortgage bonds, but it is quite certain that it was after the act of 1871, which purported to postpone the statutory Hen.”

It was stated at the bar that this was a mistake in fact, and we have no evidence upon the subject before us. It does not,, however, seem to us to be a material inquiry whether any of these bonds were issued between May, 1867, and February, 1869.. It must be remembered that these bonds were issued only to fund interest in arrears.

Should the bonds and certificates issued under the act of 1869-' be postponed to the second mortgage bonds only because of the-date (1869) of the act which authorized their issue? The act of 1869 created no new debt, but put in a new form on credit the-interest on the old debt from January to July, 1868. The-coupons funded were already secured by the Hen of 1866. They were as high security as the bonds from which they had been.cut, and entitled to share “pari passu ” with them. City of Kenosha v. Lamson, 9 Wall. 483; City of Lexington v. Butler, 14 Wall. 282; State v. The Spartanburg and Union R. R. Co., 8 S. C. 129. If the coupons had not been funded they would now-have the effect of enlarging the lien debt by the amount of this-issue. Must the holders of these bonds be postponed only because they accepted these bonds and certificates in exchange for-their coupons already secured by Hen ? That must depend upon, the terms upon which they were issued and received. Whether-one security operates in payment or satisfaction of another, is-always a question of intention. Did they intend to discharge the coupons already due and relinquish their Hen by taking in satisfaction bonds for the same amount not due for twenty years, and to be secured by a postponed lien ? The bond or certificate is-not the debt, but the evidence of it. Nothing is payment but that which produces payment, or is received as payment. To give one security for another of equal dignity, without the intention of discharging the debt, is not payment, but substitution, and in such case it is well settled that a Hen, such as a mortgage previously existing, is not discharged, but remains and still secures-the debt in the new form. Burton v. Pressly, Cheves’ Eq. 1; Costello v. Cave & Bradley, 2 Hill 528; Gardner v. Hust, 2 Rich. 608; Kelsey v. Rosborouyh, 2 Rich. 244; Bank v. Bobo, 9 Rich. 34; Adger v. Pringle, 11 S. C. 527; 6 Wait’s Act. & Def. 410, 413, 417.

Here the intention is not doubtful. The bonds were issued and accepted, according to the terms of the act, which is the contract of the parties, and this declared expressly that the statutory lien of 1866 “is extended over them.” From the view which the court takes, the bonds issued under the act, of 1869 should have priority to the bonds issued under the second mortgage of 1867, without regard to the date of their issue.

The result of this reasoning would be to place the bonds issued under the act of 1869 on the same footing with those issued under the act of 1866; but that part of the Circuit decree which places the bonds of 1869 “after” the bonds issued under the act of 1866, not being appealed from, we are not at liberty to disturb it.

It is adjudged that the Circuit decree be affirmed and the appeal dismissed.

Willard, C. J., and McIver, A. J., concurred.