Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/826

 § 818.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XVII. § 818. When a railroad company mortgages its road, "built and to be built," although at the time when the mortgage is executed but a portion of the road is built, the mortgage attaches to the unbuilt portions of the road as they are built, and takes precedence of the claims of the contractors 1 (unless there are statutes giving contractors a prior lien), and judg- ment creditors, as well as bondholders under a subsequent mortgage covering the portions of the road which were unbuilt when the first mortgage was given. 2 A mortgage, however, intended to cover after-acquired property attaches to such property in the condition in which it comes into the possession of the company. 3 Consequently, if property, when acquired by the company, is already subject to mortgages or other liens, the general mortgage, though prior in time, does not displace them ; and if a railroad company when acquiring property gives back a purchase-money mortgage, the giving of the mort- gage and the purchase of the property constituting one trans- action, the purchase-money mortgage will take precedence, in respect of the property purchased, over every lien, or mort- gage, or judgment covering the entire property of the com- pany. 4 Thus, a railroad company mortgaged its present and future property, and then entered in a written agreement with a car company, by which the former hired certain cars at a rent payable monthly, reserving the right to purchase them at their original cost, the car company retaining the right to rescind the agreement if the railroad company failed to pay the interest on its bonds. While this contract was in force, the mortgagee filed a foreclosure bill, and a receiver was appointed in the foreclosure suit, who took charge of the road, and used Fox v. Seal, 22 Wall. 424. Compare Woods v. Pittsburgh, Cinn. and St. L. Ry. Co., 99 Pa. St. 101. 1 Duuhain v. Railway Co., 1 Wall. 254; Thompson o. Valley R. R. Co., 132 U. S. 68. 2 Pennock v. Coe, 23 How. 117; Galveston It. R. Co. v. Cowdrey, 11 Wall. 459; First Nat. Bk. v. Ander- son, 75 Va. 250. See Buck v. Sey- mour, 46 Conn. 156; Branch v. At- lantic, etc., R. R. Co., 3 Woods, 481. 8 Botsford v. New Haven, etc., R. 806 R. Co., 41 Conn. 454; Williamson v. New Jersey Southern R. R. Co., 29 N. J. Eq. 311. 4 United States v. New Orleans Railroad, 12 Wall. 362, where it was held that a failure to register the purchase-money mortgage made no difference; but the court said that if the purchased property had been rails to be attached to the road, the case might have been decided dif- ferently. See, also, Botsford v. New Haven, M. and W. R. R. Co., 41