Miller, J.,
delivered the opinion of the Court.
By a mortgage dated the 14th of January, 1876, Andrew J. Myers and his wife, conveyed a lot of ground and premises located on Monument street, in the City of Baltimore, to the .Ives Manufacturing Company of Medina, in the State of New York, as collateral security for certain undertakings therein specified, and the main questions presented by the cross-appeals in this case are, 1st, is the mortgaged property responsible to any extent for these engagements? and 2nd, if so, to what extent? These we shall consider in their order.
1st. The claim for total exemption arises in this way. It appears that by a decree of the Circuit Court for Baltimore County, passed in 1860, in a proper proceeding for that purpose, Myers was appointed trustee to execute the trusts created by the will of Edward Griffith, who had died in 1853. This appointment was made in consequence of the death of one, and resignation of the other of the executors and trustees named in the will. The principal beneficiaries and cestuis que trust under the will were Mrs. Myers, a daughter of the testator, and her children. Under this appointment, Myers received into his possession, and had charge of a very large estate consisting of real and personal property, with power of sale and investment and re-investment for the benefit of his wife and children, and continued in charge thereof until March, 1876. On the 14th of March, of that year, Mrs. Myers, by her next friend, filed a petition *537in that cause, stating that she had reason to believe that a very large portion of the estate had been lost and wasted by her husband, and praying that he should be required to report an account for the money and property he had so received, and to state what disposition he had made of it, and that a new trustee be appointed in his place. Myers answered this petition admitting its averments as to the loss to the estate by his management thereof, and with his answer, filed a report stating what he had received, and what investment and disposition he had made of the trust funds. The Court thereupon on the 28th of March, 1876, passed a decree removing him from the trust, and appointing Edward P. Suter, trustee in his place, with power and authority to recover all the trust property wasted or misapplied or improperly used or appropriated by Myers, and for that purpose he was directed to. institute at once all necessary legal proceedings.
Mr. Suter, the trustee, now insists that though the title to this Monument Street property stood in Myers’ individual name, yet it was in fact purchased with these trust funds and cannot therefore be sold to satisfy any of the obligations secured by the mortgage. This equity is relied on in a case wherein the mortgagee is seeking to enforce the mortgage, and of course the first step to be taken by the trustee who sets it up is to establish by clear and satisfactory proof that the money belonging to the trust estate has been invested by Myers in this property. If there is a failure of proof on this point it is needless to inquire whether there are any other valid objections to the claim. The only proof adduced by the trustee in support of this position is a statement made by Myers in the report accompanying his answer to his wife’s petition in the Baltimore County case, to the effect that he had invested $10,000 cash, belonging to the trust estate, in this property. But assuming (without so deciding) that this statement contained in that record, can be admitted as evidence *538against the mortgagee in this case, it is fully met and its effect destroyed by the letter of Myers produced on the other side, dated the 24th of' December, 1875. In that letter, written to the company (the mortgagee) to quiet their apprehensions and to assure them of his ability to meet his obligations, he sets out an itemised statement of real, and personal property, including this Monument street lot and premises, which he values at $20,000, which he held in his own name, and adds, “ this does not include the property of seventy or eighty thousand dollars for lohichlam trustee.” This is an explicit and positive assertion of individual ownership by the same party of this same property, and that being the state of proof on this subject, it is plain the tracing of the trust funds into this property has not been made out by such proof as the law requires.
2nd. The extent of liability depends upon the construction of the mortgage itself. It is shown by the record that a son of Mr. Myers was a member of the firm of Eigelberner & Co., doing business in Baltimore. This firm was engaged in the sale of plumbers’ hardware and materials, and the Ives Company were manufacturers of such articles. On the 23rd of October, 1875, this firm and company entered into a lengthy written contract, the terms of which need not be stated at length. It is sufficient to say that by this contract, the company engaged to supply the firm with, certain manufactured articles specially described, in specified quantities, and at specified prices, which the firm agreed to pay for, and to give their notes endorsed by Myers, for-the amounts found due upon monthly settlements ; and by a clause expressed in very plain language, it was mutually stipulated “'that this agreement shall be, and remain in full force for the period of five years from the first day of January, 1876.” At the same time, Myers by a written contract under seal, endorsed on or appended to this agreement, engaged to *539guarantee the performance of their part of the agreement by the firm, and the payment hy them to the company, “ of all sums which may hereafter become due to them under the provisions of this agreement,” and to endorse “ all notes made hy the firm to the company pursuant to the aforegoing agreement.” Afterwards, on the 14th of January, 1876, Myers and wife gave to the company the mortgage in question, the recitals in which plainly set forth the purpose for which it was executed, and the intention of the parties in giving and receiving it. These recitals are to the effect that “ whereas the said Myers in pursuance of the terms of a certain agreement or contract entered into by him with said company, (which agreement is annexed to a contract entered into between the said company and the firm of Eigelherner & Co., on the 23rd of October, 1875,) did agree to execute this mortgage as a continuing collateral security, (to be limited in amount to the sum of $20,000,) for the performance on his part of the said contract between him and the company, and also as collateral security for the payment as stipulated hy said contract of any and all notes, drafts, acceptances or other obligations signed or endorsed by him, and held, owned or negotiated by the said company,” and in consideration of the premises,” the conveyance is made. There is nothing in the defeasance clause, or in any other part of the instrument giving it any broader scope, or authorizing any broader construction to be placed upon it, than what is stated in these recitals. From these, it plainly appears to have been given as collateral security for the guaranty of Myers, endorsed on the contract of the 23rd of October, 1875. It so clearly refers to this guaranty and contract, that both of them, for the purpose of construction, are to be read in connection with it, and as if incorporated into it so as to form one instrument. The guaranty which the mortgage secures is, hy its terms, confined to the stipulations of the contract, and as the latter was not to take *540effect until the 1st of January, 1876, it follows that the mortgage covers only the dealings between the firm and the company, which took place under the contract after that date, and does not extend to any antecedent business transaction betwee'n the same parties. The record shows there had been such antecedent dealings, and that Myers had endorsed or signed the notes of the firm given for merchandise previously sold to them by the company, but these, according to the construction we have given it, are not secured by the mortgage. We are therefore clearly of opinion the Circuit Court was right in thus limiting the extent of liability to which the mortgaged property is to be subjected.
The remaining question is, has the auditor properly stated the amount of such liability, in the account which the Court has ratified. He has charged the mortgage with the aggregate amount of purchases made by the firm from the company after-the 1st of January, 1876, until the dealings under the contract ceased. To this, no valid objection can be made. He has then credited this amount with the sum of $288.89, for profits due the firm on goods shipped to other parties through their orders, and also with the sum of $102.87, for freight paid by the firm on goods shipped to them after January 1st, 1876. These credits are in accordance with the terms of the contract, and are all shown by the proof to relate to transactions since the contract went into effect. They are not payments of money on account, so as to fall within the doctrine requiring them to be applied to the antecedent unsecured indebtedness, or to the first items of debit in the account, but credits growing out of and springing from the contract itself, and in our judgment were properly allowed. He has also allowed a credit of $40.86 for merchandise returned. To this we see no objection. It is allowed as a credit to the firm in the company’s own account, and as of the 1st of January, 1876. The remain*541ing credit of $516.58, is for the proper proportion of the dividend received by the company on their whole claim from the assignee in bankruptcy of the firm. It appears that the company filed in the proceedings in bankruptcy, their whole claim, including what was due them by the firm before as well as subsequent to the 1st of January, 1876, and received thereon the sum of $1409.92, as a dividend on the 27th of February, 1877, after the first auditor’s account had been stated in accordance with the opinion of the Court construing the mortgage, but before it had been ratified. In this state of the case, and as between the parties to this mortgage, it is, we think, just and right that a proper proportion of this sum should be applied in exoneration of the obligations to which the mortgaged property is subjected, and in so deciding, we in no wise disturb the general doctrine of application of payments as settled by previous decisions. We also think there was no error in the refusal of the auditor to charge the mortgage with half commissions to the trustee appointed to sell, and the costs of advertising the property. The proof does not show that any note or other obligation given by Myers under the mortgage, as we have construed it, had matured at the time of the advertisement, or that any indebtedness by the firm to the company under the contract had then matured and remained unpaid. For these reasons we find no error in the order appealed from, and it must therefore be affirmed, and the cause remanded.
(Decided February 20th, 1878.)
Order affirmed, and cause remanded.