Page:Federal Reporter, 1st Series, Volume 8.djvu/140

 126 FEDERAL REPORTER. �notes, to be put in circulation as money. Would any one insist that, if a subsequent mortgage should be given ou tiie same property, which was in terms subject to the lien of the first, the company would in this way be prevented from keeping its old notes in circula- tion, and taking them in and paying them out as before ? Clearly not, I think. And why ? Because the nature of the paper secured was such as to preclude such an idea. The notes were put out for circulation. They were to be used as money. When in the posses- sion of the company they were for the time being inoperative, but as soon as they were out their attributes as notes secured by the mort- gage were all restored. Such would have been the evident intent of the parties, and such, I am sure, is the effect the courts would give to what had been done. �Here the bonds put out, while not for circulation as money, were intended as articles of commerce, to be bought and sold in the mar- ket, and passed from hand to hand as current negotiable securities. They were to be used in trade. When in the hands of the Com- pany their lien under the mortgage was suspended ; but the moment they were out in the usual course of business, it again took effect as of the time the mortgage was given. Any other rule than this would materially impair the marketable value of this class of instru- ments, and tend to defeat the very object of their execution. The whole issue of such bonds must be treated as of the date of the mort- gage, without regard to the time they were actually put out, unless the contrary is clearly expressed. �As Mr. Williams took the bonds direct from the company at a time when he was himself a director, he is charged with notice of the faets. His lien, therefore, would not be good as against the second mort- gage if the company had not the power to use them as it did, and transfer a corresponding interest in the mortgage. As I think, it had that power. The bonds were not due, and had not, commercially speaking, been retired or extinguished. It follows that to the extent necessary to secure the note for which they are held, they are enti- tled to the benefit of the lien created by the terms of the mortgage. �The 210 loose coupons held by Mr. Williams as collateral were eut from bonds pledged to him December 4, 1872. The original loan made at that date was continued by varions renewals until 1878, when the bonds, with the matured coupons eut off, were sold, and the proceeds applied to the payment of the debt. A part of the debt still remains unsatisfied, and the coupons eut off are unpaid. I see no reason why they may not be enforced as valid claims under the ��� �