Page:Harvard Law Review Volume 32.djvu/540

504 504 ■ HARVARD LAW REVIEW a third, is placed. The deeds of trust securing the underlying bond issues usually contain the conventional clause, mortgaging all the property thereafter acquired by the mortgaging corporations as additional security for the bonds issued. The new corporation, from the proceeds of the new bonds issued by it, makes extensive replacements and improvements, and adds new lands or equip- ment to the plant or system. The underlying bondholders claim a first lien upon all of the property of the new corporation, includ- ing this after-acquired property, and often quarrel among them- selves as to their priorities thereto; the overlying bondholders assert that they hold a first lien upon all the after-acquired prop- erty. Thus a vexed legal and engineering question oflFers a high- road to fruitless litigation and delay. For, although the effect of a clause mortgaging after-acquired property is in its nature clear, the precise property covered thereby is often open to doubt. Where a mortgagor agrees to mortgage any property he may acquire after the date of the mortgage, a court of equity will specifically enforce this contract to mortgage, and will therefore, without any formal performance of the agree- ment to mortgage, create an equitable Hen which attaches to the after-acquired property so soon as it comes into existence.'*" But will equity enforce this agreement against the bondholders of the successor of the mortgaging corporation as to property acquired by this new corporation? At first glance, such a result would seem illogical; but the courts have gone to considerable lengths in hold- ing that this equitable lien attaches to property acquired by a succeeding corporation. The Supreme Court of the United States ^ for example, has held that where the "A" railroad corporation surveyed the route for a railroad from Springfield, Illinois, to Chicago, constructing through the "X" construction company, a very small part of the road, and issued bonds, secured by a deed of trust containing an after-acquired clause, the lien of these bonds would attach to parts of the contemplated road built by the "B" corporation, the successor of "A" and also to other parts of the contemplated road built by the "C" corporation, successor of "B." The decision is somewhat confused by mesne conveyances acquired Personal Property," 19 Harv. L. Rev. 557.
 * ° See WiLLiSTON, Sales (1909), 168, also Samuel Williston, "Transfers of After-
 * ^ Wade V. Chicago, Springfield & St. Louis R. R. Co., 149 U. S. 327, 341 (1893).