Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/825

 CHAP. XVII.] LEGAL RELATIONS AMONG CREDITORS. [§ 817. legislative supervision for the good of all, unless restrained by some constitutional prohibition, seems almost necessarily to form one of their ingredients, and when insolvency is threat- ened, and the interests of the public, as well as creditors, are imperilled by the financial embarrassments of the corporation, a reasonable 'scheme of arrangement' may in our opinion as well be legalized as an ordinary ' composition in bankruptcy.' In fact such i arrangement acts ' are a species of bankrupt acts. Their object is to enable corporations created for the good of the public to relieve themselves from financial embarrassments by appropriating their property to the settlement and adjust- ment of their affairs, so that they may accomplish the purposes for which they were incorporated." 1 § 817. A mortgage by a corporation, as for instance a rail- road company, when competently made, attaches to whatever of the property of the corporation it purports to cover, whether acquired or to be acquired ; and the bond- holders under such mortgage have ordinarily a lien on the property covered by the mortgage prior in law as in time to any subsequently accruing rights of other creditors. 2 But if at the time of ex- ecuting a railroad mortgage there exists statutes which give contractors a first lien on railroads for labor performed on them, a contractor by duly filing his lien in accordance with the stat- ute will acquire as against the mortgagees and bondholders a lien prior in effect, although the mortgage may have been recorded first. 3 Mortgages covering property to be ac- quired. Contract- ors' liens. 1 Canada Southern R. Co. v. Geb- hard, 109 U. S. 527, 534, etc. 2 See, e. g., Loudenslager v. Ben- ton, 4 Phila. 382; Covey v. Pitts- burgh, Ft. W., etc., R. R. Co., 3 Phila. 173; Hamlin v. Jerrard, 72 Me. 62; Hamlin v. European, etc., R. R. Co., 72 Me. 83. As to what property a railroad mortgage covers, see § 676. So when a corporation accepts bonds of a state or county issued by virtue of a law which declares that they shall be a first lien on its property, such lien will arise on the acceptance of them by the corpora- tion, and a purchaser of the road or of its bonds issued under a subse- quent mortgage, is bound to take notice of the act; and the lien of the county under the act is enforce- able against the funds in the hands of a receiver, appointed in a fore- closure suit of the subsequent mort- gage, and against the purchaser of the road. Ketchum i St. Louis, 101 U. S. 306; Wilson v. Boyce, 92 U. S. 320. 3 Brooks v. R. R. Co., 101 U. S. 443; Meyer v. Hornby, ib. 728. See 805