BLAKE v. PINE MOUNTAIN IRON & COAL CO. et al.; SOUTHERN LAND-IMPROVEMENT CO. v. MERRIWETHER et al.; BLAKE v. MERRIWETHER et al., 76 F. 624

HAMMOND, J. (after stating the facts as above). The question of jurisdiction needs no very extended treatment, because it is governed by the decision of this court in a case where the ancillary or auxiliary jurisdiction of the courts of the United States, when they have possession of property by receivers, and are engaged in administering the trusts pertaining to it, had elaborate consideration, and a full examination of the authorities relating to that subject.

Broadly stated, the principle is that from the inherent necessity of the situation, and to prevent injustice, those courts must entertain jurisdiction of any claim by.any one whose rights or interests would be injuriously affected by the action of the court in dealing with the property and administering the trust; certainly, if the suitor claim any lien on the property, or if he set up any right in or to the thing of which the court has possession.

How much beyond this the principle may extend when there is no technical lien or claim of it, but only an interest that is material, and may be compromised or injuriously embarrassed by the court’s decree in relation to the property, we need not decide in this case. But, where the auxiliary, jurisdiction does fairly attach, those ordinary limitations which are imposed on original jurisdiction do not apply. Compton v. Railroad Co., 31 U. S. App. 486; s. c., sub. nom. Compton v. Jesup, 15 C. C. A. 397, 68 Fed. 263.

The objection made to the jurisdiction of Blake’s intervening petition is that he being an assignee of the Pine Mountain Company, which is a corporation of Kentucky, and that corporation and other necessary and indispensable parties to the suit being likewise corporations and citizens of Kentucky, his petition is subject to the prohibition of the act of August 13, 1888 (25 Stat. 433, c. 866, § 1; 1 Supp. Rev. St. 612), which forbids assignees to sue unless their assignors could have also sued, except where the instrument is made payable to bearer and executed by a corporation. Wilson v. Knox Co., 43 Fed. 481.

It is argued that the instruments here involved not being within this exception, and Blake not having, on his own showing, any lien, but only a claim that the Pine Mountain Company should be compelled to assign certain alleged liens to him in order that he may enforce them, the circuit court was without jurisdiction. It is also argued that new parties cannot be brought in by cross bill or by intervening petition, and that any original bill would be defeated by this want of diversity of citizenship between Blake’s assignor and these necessary defendants.

The obvious answer, under the decision in Compton’s Case, supra, is that whether the ancillary juisdiction be invoked by original bill, by cross bill, or by intervening petition, diversity of citizenship is not' essential to its maintenance; and, as it then becomes a mere question of pleading or practice, if a petition may be resorted to the parties will not be put to either original or cross bills to bring in new parties in cases of administration by receivers, the petition serving every purpose if proper process shall bring them in.

We need not hold that the act of congress we have cited is itself subject to the implied exception in cases of the auxiliary jurisdiction we have mentioned, because, by its very terms, if the assignor might have prosecuted the suit in the federal court the assignee may. The Pine Mountain Company could have done this.

It is true, the burden of Blake’s complaint is that the Pine Mountain Company has violated.its contract, and has not assigned the outstanding debts and liens to him, or, going further back, that it has not acquired them by paying the money due to the original vendors holding these liens which were to be assigned to him under his contract Thus it would seem as if neither held a debt or lien to be enforced here. But this is only apparent, so far as it concerns the question of jurisdiction.

The property now in the hands of the receiver of the circuit court, if Blake’s contention be sustained, could be appropriated' to his debt against the improvement company, if the fund be large enough, by a process of successive subrogations to liens that it is averred do exist somewhere, and are held by somebody who could be reached for any payment ordered in this case. He may be wrong in claiming any benefit of them, but this does not defeat the jurisdiction to inquire whether he be right or wrong in making the claim.

This claim to the benefit of liens, real or imaginary, would be destroyed by the foreclosure sought in the original suit, of which the circuit court had confessedly jurisdiction, and can only be saved and enforced by proceedings ancillary to that suit; so that the case falls plainly within the principle of the Compton Case, supra, and the circuit court was justified in retaining the jurisdiction on that ground.

Moreover, it may be suggested that if Blake does not directly attack the existence of the lien which is being foreclosed in the original suit, to which his intervening petition is ancillary, — that is to say, the lien of the debenture bonds, — he objects to its immediate enforcement, and claims a preference over it.

If he have only an action for damages for a breach of his contract: against the Pine Mountain Company, the original holder of the bonds, and which is, as he contends, still the holder of them, and by a judgment at law could subject those bonds to the payment of his debt, or defeat their lien as against his own to be acquired through a judgment at law, he might come into the foreclosure suit, and ask to have it asserted and the property continued in the hands of the trustee until he could establish his judgment and lien; particularly where his claim for damages arises out of the very contracts which produced the bonds and their lien.

If, as between him and the improvement company, he has, as he claims to have, a debt against it and the Pine Mountain Company, and the latter has, by its own contracts with him and the improvement company, disabled itself from appropriating tins property to the lien of the bonds, this attack upon the lien to be foreclosed surely may be made by becoming a party to the suit, and then proceeding by cross bill or by intervening petition or original bill, any of which would be ancillary to the original jurisdiction.

It is true that Blake’s intervening petition is confined to a theory of subrogation to previously existing liens, and does not seek to reach the assets otherwise, as by judgments at law against the improvement company or the Pine Mountain Company, or both, nor by asking the circuit court in equity to establish such legal rights by issues to a jury or reference to a master; but he has in that petition a general prayer for relief, and a pending original bill for rescission in the same court of equity, also with a general prayer which was heard along with the original foreclosure suit and his intervening petition therein; and having this general jurisdiction of the whole subject-matter, and all the parties before it, there could be no difficulty in administering whatever relief he would be entitled to under the circumstances of the case.

In a suit for general administration of a trust by foreclosure of a mortgage, where the classification of liens and preferences takes place, particularly in the cases of those commercial mortgages of corporate property which are essential instrumentalities of corporate enterprises, the' usual strictness of pleading is not required by those who come in to assert their claims to the property, or for payment out of it.

Oftentimes claims may be proved and allowed before a master without technical pleading of any kind, and when once the suitor by petition is in court, with proper parties, the court may and generally does grant whatever right or relief he may have, without that strictness of pleading which in other classes of litigation might be required. If occasion arise for technical procedure, the court can order it, even to- the trial of issues by a jury, if necessary or desirable.

Therefore we may dismiss that severe scrutiny of the pleadings which has been had in this case, and consider whether Blake is entitled to any of the relief which he has urged as due to him, on the facts as they appeared at the hearing of all the cases together, — a procedure notably proper in this litigation, where the contracts themselves are so intimately interwoven and dependent on each other.

The chief impression made by the examination of this case is that the principal parties were engaged, without money, in enterprises especially speculative in their character, requiring the use of large sums of ready money and time for that development which should bring remunerative returns for the capital invested.

That Capital was not forthcoming, in this instance, except as it should spring out of success in the contemplated sales of corporate credit, so often the main, if not the only, basis of similar enterprises, some of which are successful, but many of which utterly fail, as this did, by the miscarriage of the great expectations in that direction, at once involving interested parties in mutual incapacity to carry out their contracts with each other.

When ready money was needed, resort was had to the use of lands in large quantity, — a use likewise speculative in character, and requiring time to produce the money; and when these expectations again failed the parties sought to throw the blame on each other, as excuses for nonnerformance of prompt payments, which they knew could not be made if these failures should occur.

Whatever grounds for the failure of these expectations may be found in a general financial depression and panic, primarily, they rest on the inability of the parties to meet their obligations incurred in the delusions of hopeful speculation, which delusions appear abundantly by the proof in this case.

It is just these hardships which a court of equity cannot relieve by rescinding contracts, or making new ones by construction, through the process of balancing blame for nonper-formances, and going into parol proof of other or different intentions than those expressed in the contracts themselves, — intentions relating to failures not anticipated at the time the contracts were made, or not provided for by the terms of the agreements, as they would have been if the parties had not been improvident in neglecting such protection as was open to them against possible failure and change of conditions.

The reasonableness of a contract, its fairness and justice, are to be determined as of the time when the parties entered into it, and so of the intentions involved in the construction of their agreements, and none of these are to be influenced by the force of subsequent changes in events or circumstances. Fry, Spec. Pert. p. 193, c. 6. It may be an improvident contract, but improvidence or inadequacy does not determine a court of equity to rescind, or to decree against specific performance. Sugd.

Vend. c. 5, § 3. “The question of the want of equality and fairness, and of the hardship of the contract, should, as a general rule, he judged of in relation to the time of the contract, and not by subsequent events. We do not intend to say that the court will never pay any attention to hardships produced by a change of circumstances, but certainly the general rule is that a mere decline in values since the date of the contract is not to be regarded by the court in cases of this nature.” Lee v. Kirby, 104 Mass. 420, 428; Marble Co. v. Ripley, 10 Wall. 339, 356.

These authorities are cited and quoted, -as we quote them, with approval, in Telegraph Co. v. Harrison, 145 U. S. 459, 472, 473, 12 Sup. Ct. 900. And again; “The legal effect of a transaction cannot be altered by the subsequent conduct of the parties, and it makes no difference if that conduct be founded on a misapprehension of the original legal effect.

A man who acts on a wrong construction of his own duties under a contract he has entered into does not thereby entitle himself, though the ants be done for the benefit of the other party, to have the contract performed by the other party according to the same construction.” Wald, Pol. Cont. 402.

Nor does the fact that a party has not performed his contract even according to its legal effect necessarily entitle the other party to rescission, if either or both have partly performed, and circumstances of embarrassment have thereby arisen which make it impracticable to restore the status quo, — not merely in title or ownership, but likewise in relative advantage and use of the thing restored, when the nature and exigencies of the business about which the contract was made are considered. Marble Co. v.

Ripley, supra, where the court remarks “that one party to an executory contract partly executed has violated his engagements is generally no sufficient reason for a decree by a court of equity, at the suit of the other party, that the contract shall be annulled.” And at last neither the specific performance of a contract, nor its rescission, is a matter of absolute right, but is wholly within the discretion of the court, not arbitrarily or capriciously exercised, but always with reference to the facts of that particular ease, and the established rules of equitable action. Hennessey v. Woolworth, 128 U.

S. 438, 442, 9 Sup. Ct. 109; Delaine Co. v. James, 94 U. S. 207, 214; Kimball v. West, 15 Wall. 377; Eyre v. Potter, 15 How. 42; Grymes v. Sanders, 93 U. S. 55; Town of Springport v. Teutonia Sav. Bank, 75 N. Y. 397, 402; Story, Eq. Jur. §§ 393, 394; Beach, Eq. Jur. §§ 506, 634; Id. § 551 et seq.; Wald, Pol. Cont. 521 et seq. Some of these cases cited to illustrate this general rule have more particular reference to points which appear in this case. In Eyre v.

Potter, supra, the nonadmissibility of parol testimony, to vary, alter, or contradict a deed was urged, as here it has been; and, while the court does not direct attention to it especially, the proof was admitted and discussed, and guided the court in affirming the decree, and was admitted, not only to enlighten the court in the construction of the contract Tby the light of the circumstances then existing, but to enable it to adjudge of its fairness and freedom from inequitable infirmities, though not in any sense to alter it.

It was ruled that mere inadequacy of consideration does not establish either unfairness or fraudulent motives. In Kimball v. West, supra, it was ruled that, where, one has a covenant of warranty against defects of title, he must rely on that remedy, unless some loss has been imposed by delay in perfecting title, and even then, if the injury is remedial in damages, a court may refuse rescission. -In Delaine Co. v. James, supra, to rescind a contract was held to be an extraordinary power, not to.be exercised except in a clear case proving the fraud, or other equitable foundation for the rescission. In Grymes v.

Sanders, supra, it was said that: “A court of equity is always reluctant to rescind unless the parties can be put back in statu quo. If this cannot be done, it will give such relief only where the clearest and strongest equity demands it. Here the appellant secured the money paid on the contract in entire good faith. He parted with it before he was aware of the claim of the appellees, and cannot conveniently restore it. The imperfect and abortive exploration made by Bowman has injured the credit of the property. Times have since changed.

There is less demand for such property, and it has fallen largely in market value. Under the circumstances, the loss should not be borne by the appellant.” It is upon such considerations as these that a court of equity proceeds in exercising its discretion whether it will rescind a- contract, specifically perform it, or leave the parties to such remedies as they may have at law for the breaches of their contract; this being the innate remedy afforded by our law for all breaches of contract, and deemed sufficient, except where the peculiarities of the case permit an interference by, or aid from, a court of equity.

We shall have occasion to return to this case when we come to consider that restoration of the status quo which must precede a rescission of any contract, as applied' to the facts of this case. Counsel on both sides cite and quote what has been said on the general subject in 21 Am. & Eng. Enc. Law, 44.

A general examination of the cases there grouped is impracticable, if not impossible, and we omit the task; but we may usefully call attention to a distinction, to be noted in examining all authorities, between that kind of voluntary rescission wiiich the parties, or one of them, may elect to make for himself, and take the consequences at law, and that kind which a court of equity compulsorily may enforce. They are not the same, though closely analogous. Of the former kind was the case of Ankeny v. Clark, 148 U. S. 345, 13 Sup. Ct. 617, cited for the appellant here; and so was Norrington v. Wright, 115 U.

S. 188, 6 Sup. Ct. 12, also cited for him. And so, again, was Miller v. Phillips, 31 Pa. St. 218, and Lauman v. Young, 31 Pa. St. 306, from which quotations are made, that if there be no performance within the time stipulated the contract may be rescinded, and that a defective, worthless, and negligent performance is no performance at all. This may be so both at law and equity, but because, acting upon it, the parties may voluntarily abandon or rescind the contract, and successfully sue or defend at law for nonperformance, it does not follow that a court of equity will also rescind for nonperformance.

It often will not, but leaves the parties severely alone with their legal remedies, as in Kimball v. West, supra, and hundreds oí other eases, no doubt. If nonperformance does not always authorize a court of equity to compel rescission, partial or worthless performance will not any more authorize it.

Voluntary rescission and compulsory rescission are two different things, and one may have rights and remedies against one who wrongfully rescinds voluntarily, or refuses to perform, that are not identic,al in principle or results with those to which he may be entitled when he wishes to enforce a rescission unwillingly upon the adversary party.

The broad distinction between that which a parly to a contract may safely assume to do in abandoning or rescinding it, and Ihen either defending a suit for a breach or submitting to damages rather than perform it, and the right to demand rescission in a court of equity, should not be overlooked, or there may be a confusion of principles governing the rights of the parties in the two classes of cases. The case of Kentucky River Nav. Co. v.

Com., 13 Bush. 435, unlike these last, was indeed a case of rescission in equity, where the remedy was properly applied, not because the company was insolvent and damages at law could not be collected, tiras resulting in a right of rescission, since specific performance was impossible, as urged by counsel, but because, ’in the nature of the covenant itself, actual, physical performance was the only substantial interest the commonwealth could have had in the lease, and irremcdial mischief would result from either imperfect or non performance.

It was the covenant of a lessee to repair dams, and otherwise make navigation improvements, so as to produce a continuous navigation; and manifestly, as the court says, no damages at law could be adequate.' Nothing less than the doing of the work could suffice, and the company, being insolvent, could not do it. But the court does not bold that, if money damages would have compensated, the insolvency of the party breaking the contract would have been a ground of rescission, but quite the contrary.

We do not say that insolvency, or inability to respond in damages, is not to be considered, along with all the other facts, in determining the question of rescission, but only that there is not an absolute right of rescission because of it, where an action at. law is the proper legal remedy for redress, as upon a covenant of warranty against defects of title in the sale of real estate.

Nor is the violation by a trustee of the requirements of his trust, or a partial and preferential administration of them, a ground for rescission, when there is such abundant redress by proceedings to remove him, or to control his action by injunction or decree, adjusting his accounts in the settlements that may be required of him according to the demands of the trust and the legal rights of all the parties. ■ In the application of these principles of law, and in the view we have taken of this case, it is not necessary to follow in detail the elaborate completeness of the arguments that have been made with such, fullness of treatment by counsel on both sides.

As was well remarked by the learned judge who tried the case at the circuit, there can he no disagreement with counsel as to most of their propositions of law as to the right of sureties or others to be subrogated to the liens of creditors whose debts they have paid.

But the difficulty here which demands so much argument arises, not only out of the fact that the debts have not been paid, but also out of the impossibility, without perversion, of adjusting these familiar doctrines of equity to the attitude Blake has, assumed by the very contract he made during the transactions involved in the litigation, whether we look at them as applying to his demand for a rescission, or that for a specific performance of them according to his construction of the contracts.

Both sides rightly contend that all these contracts must be construed together, they are so interwoven with each other into one whole scheme of operations, in which the parties were all engaged. There are fifteen of them, as we count them in the record.

They change with kaleidoscopic rapidity in their presentation of differing designs for raising the ready money so much needed, or substituting corporate credit for it, or the use of large quantities of land in lieu of it, but they'never change in the one certain feature of the whole scheme, that the debenture bonds should have a paramount lien for their payment; and yet the formidable struggle Blake makes in this record wholly depends upon displacing that preferential lien of the bonds, and substituting a preference for himself not specifically provided -for by the contracts, as it might and should have been if that were the intention, but by a process of artificial subrogation to the liens of the original vendors of the Kentucky lands, — not directly, but by a kind of process of tacking one subrogation to another, the Pine Mountain Company being first subrogated to that lien of the original vendors vwhieh was held by them to secure the Pine Mountain Company’s own notes for the original purchase money, the “assumed liabilities” of the improvement company, and then the subrogation of Blake to the right of subrogation of the Pine Mountain Company, — and all this in respect of the most fragile of all liens known to a court of equity, one most easily displaced, and never existing except by the clearest implication of the intention of the. party that it should stand as a security for purchase money yet unpaid: the-naked, equitable, vendor’s implied lien for purchase money.

Besides this, there is claimed a kind of subsidiary subrogation, but more directly, to the lien of the Pine Mountain Company for the “unpaid balance” which constituted a part of the consideration of the purchase of the lands by the improvement company.

And this is the same implied vendor’s lien, never arising for unliquidated or uncertain demands, or for breaches of covenants, nor where it is clearly manifest that it shall not exist, which is always defeated, presumably, by the payment of the money, or the receipt of some other thing taken in lieu of money; is never transmitted to another, except upon the most imperative demand of equitable justice, as where one who actually pays is compelled to pay another’s debt in behalf of the original purchaser, and may be then substituted to the lien of the original vendor as against that purchaser whose debt he has been compelled to pay, which is generally lost by taking other security, or by a clear manifestation of nonreliance, and is largely a personal privilege of the vendor, and not assignable.

Jones, Liens, §§ 1061, 1064,1071, 1073, et seq. But we are relieved somewhat: from going into this class of questions, so suggestive here of application to the peculiarities of this case, since the contention of Blake may be conceded, — though it is doubtful if the authorities cited go so far, — that in Kentucky a vendor's lien has greater strength than that which this general law gives it, and is in all respects as if the lien had been reserved in the deed, or has the same force as a mortgage for the purchase money. St. Ky. 1894, § 2358.

Yet Blake is, with that concession, in no better attitude to displace the lien of the debenture bonds, for the simple reason that the contracts, by their terms and necessary implications, preclude any such displacement. It would have been a senseless thing for the Pine Mountain Company to have made a mortgage on the Kentucky lands to secure (he performance of its part of the contract made with Blake, construing the contract as he now, in the changed condition of affairs, construes it. Why should it have done so, and what could it have gained by it?

The Minneapolis lands having been appropriated by Blake, as its paymaster, to the payment of the improvement company's “assumed liabilities” to the Pine Mountain Company, as its creditor, to have surrendered its own holdings of the debenture bonds as a prior lien, and given a preferential lien on the Kentucky lands to Blake to reimburse him for these same debts, would have been a mere shifting of its creditors, and to devote the whole of Its land holdings to secure only those debts, leaving for itself nothing- else as a consideration for its sell-out: to the improvement company, except a blind confidence that the improvement company would so manage the enterprise of development that the bonds and the debts would both be paid, and that the speculation wo aid tu rn out successfully, and no t disastrously.

This confidence was more naturally and properly Blake’s than that of the Pine Mountain Company. Being substantially the sole owner of the stock of the improvement company, he might have had justification for such reliance on its capabilities, or on his own as the owner and manager; but it is not one that a court of equity will impose unwillingly on the other contracting party, whose dealings imply, from the simple existence of this contract with Blake, and the. very nature of it, that it did not have that confidence in the new company doing better than itself had done.

Securities like these are made to assure against possible failures, and not to assure reckless confidence in others; and looking to such a possible failure as an inducement to taking the securities,- — a failure that has come and has, caused this litigation, — and to this anticipation as one by which the contracts may he construed, and they plainly imply, on the face of them, that there was no intention to give Blake any such security for his confidence in his own company as that which he now seeks to dig out of them, but rather to provide against: possible losses that have been realized.

In other words, the sale of its entire property was made for its own benefit; and it must be taken to be dealing with that in view, and not for the benefit of Blake, who at the time the debentures were provided for was unknown to the transaction, and who afterwards came in, not, as tins been argued, as one seeking- and willing to relieve the Pine Mountain Company of its embarrassments, and occupying the place of a purchaser from it for that purpose, hut as a paymaster of his own company, which had purchased the property.

It is clearly obvious, therefore, that a court of equity will not disturb such contracts, and by implication impose stipulations which it would have been unwise or foolish for the party to make, except upon the most imperative compulsion of consideration for incontestable facts and circumstances, that leave no room for a doubt of an intention to be so bound.

And here it may be further remarked that we know, as we know other habits of men in business and commercial intercourse, that in such enterprises as this the first care of those engaged is to provide for the bonds to be floated on the market every guaranty of priority and security of lien that it is possible to create, and all such contracts should be sustained, to that end. Here the very use of the word “debenture” implies this, and it is generally sought to so name or designate or describe and stamp the bonds with some such catchword as shall attractively indicate their priority and security.

Again, the lien of these bonds is the only lien placed specifically on the Kentucky lands, either by the original memorandum of agreement of June 13, 1891, the confirmatory agreement of June 27, 1891, the modifying contract of January 6, 1892, or that' of January 26, 1892, or the deed of February 1, 1892, and, more than all, the ultimately binding and speaking mortgage itself, in which all these contracts were concentrated, — that instrument which closed all negotiations on this subject, and within which the rights of thé parties must be confined.

Except — and this exception is of itself conclusive against any thought then existing that any other lien could displace that of the bonds — that in the modified contracts preceding the mortgage of the Kentucky lands to secure the bonds, and in the mortgage itself, there was provided for these very “assumed liabilities,” a special lien by mortgage on cértain designated parts of the property, at the option of the improvement company, namely, on the “Moss farm” and the “iown property,” which mortgage was to be, if executed, a lien “prior to the lien created by this deed of trust,” as expressed in the mortgage, and “which shall be a first lien upon the property,” as expressed in the memorandum agreements preceding it.

Although'-this was never carried out, the existence of the provision shows there was in mind an intention to make the bonds always paramount, unless especial liens were provided otherwise.

Besides, the intention is positively shown by the extreme care exhibited in providing against this possible diminution of the quantum of security for the bonds, by substituting another and additional security for them by a deposit of the stock subscriptions of approved solvency; and, more than all this, the bonds were further secured at one time, in these contracts, Iby a provision that, “to secure the payment and hasten the redemption of the said debenture bonds,” all the other assets which had been sold should constitute a trust fund in aid of the mortgage on the Kentucky lands, which was to be and is exclusively to secure the bonds.

Nor is this yet all of this kind of evidential circumstance. By all the terms of these agreements, one and all, it can be seen that the central force in the whole scheme, so far as the Pine Mountain Company was dealing for itself, was ex-ereised for tbe protection of these bonds. The various modifications of the stipulations of the contracts from time to time, the reduction in the amount of the bonds, everything shows conclusively this one fact, — the bonds were to be secured above everything else.

Now, to us, it is inconceivable how Blake and his legal advisers, when they came to thus study these contracts, and saw how exclusively (he lien on the lands was made for the benefit of the bonds, and how everything had been centralized for their protection, could for one moment imagine that they might safely rely on this process of building one subrogation on another to reach a prior vendor’s lien, or how they could conceive that they might safely treat the bonds as a payment pro tanto of that much of the original purchase money, or else as secured to be paid by the trust deed, and therefore not entitled to any equivalency of vendor’s lien, and the other part as not paid, and therefore entitled to a vendor’s lien, thus establishing an independent and supplementary vendor’s lien as a preference over the bonds for the “assumed liabilities,” and then going back, if this failed, to the initiatory lien of the original vendors to the Pine Mountain Company.

We say. if they had any such intention as this, it should have been expressed in the contract, and, not being so expressed, the absence of it is conclusive as a manifestation that tin; panics never contracted in view of any reliance on such a lien, — a manifestation always fatal to any claim of the vendor’s lien.

They were expressing their agreements in writing with great particularity, and as the vendor’s lien is. at last, only substituting an agreement by implication for one existing, but omitted from the writing, if the facts show there was a manifest intention not to make such an agreement it is never implied and forced upon 1he parties. We quite agree with counsel for the appellees that this whole conceptual of subrogation is an afterthought horn of the losses and misfortunes which bear heavily on one who has made an improvident contract. as it turns out, but against which, we have shown, equity cannot relieve.

As was said in Grymes v. Sanders, supra, those losses growing out of a change of times and fall in values should not, on the circumstances of this case, fall on the appellees. They possibly were selling out in view of the fact that they anticipated such chan ges, anti the improvement company and Blake were buying because they had more courage to meet or confidence to sustain the prospects of (he future. In the nature of the circumstances surrounding the contracts, Blake assumed these losses.

Nor is there wanting circumstantial evidence, to be found in the provisions of the contract Blake himself made, of an absence of any reliance upon, if not a prohibition of, such a subrogation, in Blake’s favor. The interest coupons lie was to pay, and which were indeed a lieu in his hands, as pari of the debenture bonds, were to be canceled before delivery to him. Why?

Because they were to be delivered to him, like the rest, only as vouchers of Ms payments in behalf of Ms company, of which he had become almost the sole owner, to be used in settlement with that company, but to be canceled because, as to the Pine Mountain Company and (lie holders of bonds, they had been paid; Blake being, as to that company, a paymaster, not a purchaser, and should therefore no longer share in the lien. This is as fully indicative of the transaction and true relation of the parties as anything could well be.

Again, the note for .190,800 was also considered, in the same sense, as paid with the Minneapolis lands, and no longer in any wise alive as a lien, if it ever could have been a vendor’s lien, which is doubtful, on the peculiarities of this case; for it was to be deposited with the Louisville Trust Company in trust “to abide the payment of the bonded debt,” etc.

This is unusual language, but the whole of the second paragraph of the contract of August 10,1892, is devoted to a careful safeguarding against any use of this note by Blake to deplete the resources of the improvement company until the bonds should be paid. He was to have title to the note, and the Pine Mountain Company was to do nothing to render it invalid, but all “without recourse” on that company. In respect of this scheme; why should the “assumed liabilities” have any other force in the hands of Blake than the coupons and note had?

And the very next paragraph fully explains that, with the same purpose, the other obligations were, “without recourse,” to be assigned to Blake with all necessary and proper indorsements, “all of which are to be valid and binding as against said last-named corporation, and said second party shall be fully empowered to collect, adjust, or secure for and upon his own account said claims, and all thereof, of and from said Southern Land-Improvement Company.” Could language be plainer than this to show that Blake was to be paymaster, and to have these papers as vouchers to establish his claim to be reimbursed and repaid by the improvement company all that he had paid on these debts, and only for that purpose were they to be assigned to him “without recourse” on the Pine Mountain Company?

It would be the most effectual “recourse” now to appropriate the Kentucky lands of the Pine Mountain Company sold by this very “deal,” as it is called in argument, to the uses of Blake by this subrogation process. It would be, indeed, to “rescind” this contract, and substitute one by which the Pine Mountain Company would be selling the lands for substantially nothing, if the prior lien of the bonds is to be displaced.

It is a somewhat ingenious method of shifting all the loss of the speculation on the original owner, who had sold out, or forcing the Pine Mountain Company to pay the debts of the improvement company, in place of Blake, who had promised to pay them. Here, in this paragraph 3 of the contract of August 10, 1892, was the place for the parties to provide a lien on the Kentucky lands, by subrogation or otherwise, if any were intended, to enable Blake to do that thing.

There is some plausibility in the argument made for Blake that the “recourse” provided against by the above clause was that personal recourse usually meant when commercial paper is assigned or indorsed with that phrase overwritten, but it has a larger meaning here, obviously.

This was not the bare indorsement without recourse, in ordinary business, of current notes, due or past due, but a stupendous transaction, of a complicated nature, involving mortgages, liens, trusts, and what not, for vast quantities of lands and other assets; and “without recourse,” must be held, in that associa-lion, to mean without any kind of liability whatever, direct or in* direct, personal or by liens on property. No kind of recourse was reserved among the stipulations, and none can be inserted in them.

The whole contract secured, among other things, a clear release of the Pine Mountain Company, and all its property, debenture bonds and all, from any further liability on these old debts, procured, as the release was, by a sale of its property, this part of the consideration being taken in Blake's lands in Minnesota.

The Pine Mountain Company was to pay the debts, “within thirty days,” which Blake’s company had, uuder previous contracts, bound itself to pay; but, being unable to comply with this requirement, Blake paid what was believed to be an equivalency in lands, and the very nature of the transaction demanded this broad release.

Blake’s fulfillment of the improvement company’s obligation to assume these debts necessarily released the Pine Mountain Company from them, or it had no benefit of the transaction; and the fallacy of Blake is in now taking for granted that he is, by this proceeding, pursuing the improvement company and its property for reimbursement, when in fact, if he can displace the lien of the bonds, and substitute one for himself, he is compelling the Pine Mountain Company to reimburse him, and this without any consideration whatever; for in effect he thereby receives back the value of the Minnesota lands which he appropriated to pay Ms company’s debts, and thus saves himself from that loss by throwing it on the Pine Mountain Company.

Also it is argued, on the maxim, “Expressio unius exclusio alterius,” that the careful provisions of this contract to exclude any lien for coupons paid by Blake, and that the §90,800 note should “abide” the payment of the bonds, imply that all the other things to he assigned to Blake were to he assigned with liens through subrogation, as against xhe bonds.

But these were assigned “without recourse” like the others, and the whole series of contracts shows that the “assumed liabilities” stood upon the same footing, that there are no necessary distinctions between them, and that those made by Blake are forced to meet the exigencies of his case.

The $90,800 stood on a somewhat different footing than the coupons, and, being originally a part of the consideration for the sale of the Kentucky lauds, it was supposed that, unless it was postponed to the bonds by special stipulation, Blake might try to use it to the detriment of their security, as he is now trying to use the “assumed liabilities,” it not occurring to the Pine Mountain people that he could so attempt 1 o use these last.

Undoubtedly, by this contract of August 10, 1892, the Pine Mountain Company was under an obligation to speedily pay ¡ he $100,000 of “assumed liabilities,” get them out of the way of Blake’s Southern Land-Improvement Company, and deliver them to Mm “without recourse”; and if after the 30 days expired he had filed a hill promptly, to rescind the contract, there might have been better grounds for this equitable relief, not because assignments of the claims with liens which could have been made available had not been made, for he had no such liens, but because the $100,000 had not been paid to release the pressure of the “assumed liabilities” on the improvement company in the hands of clamorous creditors, and place them in the friendly and indulgent bands of that company’s more confident.and courageous paymaster and substantial owner.

But be did not do so. Out of an abundant confidence in bis ability to manage tbis enterprise successfully, be wished to bold onto tbe advantage of using bis Minnesota lands as tbe equivalent of tbis §100,000 of “assumed liabilities,” and to tbe other considerations of stocks and stock notes which be would get; and therefore, instead of demanding compliance, as he might have done, with tbe contract of August 10, be entered into tbe subsequent and modifying contract of October 25, 1892, by which be disabled himself from asking that relief.

Whether the Pine Mountain Company bad any excuse, in Blake’s own conduct, in dealing with his assumed right to place a mortgage for §20,000 on tbe Minnesota lands, reserved in that behalf, or not, or whether its failure to pay arose from sheer inability to comply, which is more probable, on the proof, Blake by that subsequent contract excused its noncompliance by substituting another mode of accomplishing the purpose of paying the outstanding debts of the improvement company with his Minnesota lands.

It is immaterial just here whether lie released the Pine Mountain Company from its obligation to pay the §100,000 by taking up the debts or not. He forgave the obligation to do this in 80 days, and set about doing it by a trustee taking the matter in hand; and, whether rightfully or wrongfully, that trustee having assumed to advance money in aid of the trust, there is no longer any hope of rescission without a preliminary return of those advances.

To what extent the trustee has done this is immaterial, since it has made advances to some extent; and there is now raging in this record a complicated controversy with that trustee, not only concerning the advances, but also as to its administration of the trust.

The trust has been all the time in process of execution, and, whatever may be the rights of Blake in compelling the trustee to conform its administration to his just and equitable claims upon it, the very existence of the trust, and its partial or it may be imperfect administraiion, make a rescission of these contracts, in the view a court of equity takes of rescission, a simple impossibility, because it is impossible to undo what has been done, and restore the status quo.

The process suggested in argument, of settling up the trustee’s accounts by first denying its lien for advances, and strictly holding it to credits for that which has been strictly applied under the trust,’may do in adjusting its accounts, and compelling it to do that which is right; but the necessity of doing this in itself complicates and delays the restoration of the status quo in such a fashion that the discretion to which we have adverted should refuse rescission as a remedy to Blake, because that condition must of itself be an end of his demand for that relief.

We think it quite clear that, in drafting the deed of trust to the Germania Company, Blake was overreached by subordinating his interest to others involved, and that it was unfair to him, but it was, except as a complication, comparatively harmless; for a court of equity, without reforming the instrument at all, would compel the trust to be conformed to the purposes of its creation, as expressed in Blake’s contracts of August 10 and October 25, 1892, and besides the decree below has so reformed it. Hence the overreaching in thisi respect can be no ground for a rescission of all tbe contracts. Nor is ibis all.

Blake lias so interlaced himself with this whole series of 16 contracts that rescission could only take place by annulling each and every one of them, from that of June 13, 1891, between the Pine Mountain Company and Southern Land Company, to the very end, as found in that of November 7.1892, creating this trust to the Germania Company. It is idle to think of such a rescission, and yet one has only to read the series of contracts to see that it would be inequitable to undertake rescission without restoring the status quo as it existed prior to June 13, 1891.

The Pine Mountain Company should have back its property as it then was; Blake should have his property as it was August 10, 1892; the felon them Improvement Company should have its status restored by a return of its stock and money paid out»; and without all this there can he no rescission.

But while this contract of October 25,1892, and what ivas done under it, have made impossible such a restoration to each of his own as would justify rescission, it has not, in any sense;, disturbed by its stipulations that inexorable privilege of priority of lien for the debenture bonds to which we have referred as being established and fully recognized by all the preceding contracts.

Neither in the changed scheme of paying the outstanding obligations of the improvement company with the Minnesota lands, by placing them in the hands oí a trustee for that purpose, instead of a direct transfer of them to the Pine Mountain Company, with a requirement that that company should almost immediately pay the debts,nor in any other part of the contract, can we find the least indication of any desire or intention of altering the contracts in that respect.

On the contrary, it is in harmony with the contract: of August 10th preceding, in all the indications we have mentioned, except that one phrase is a little stronger than before; for, when treating of an assignment of certain of the notes already taken up by the Pine Mountain Company, it says, “Each of said notes is assigned to J. D. Blake by said Pine Mountain Company without any recourse* on it: for any purpose whatever,” which is a confirmation of our

interpretation of the extent of the phrase “without recourse” in the former contract. Heretofore we have treated the construction of these contracts in respect of this assumed right of Blake to a subrogation without regard to that perhaps more satisfactory ground upon which the learned judge at the circuit denied it, — that of tbe general warranty of the deeds conveying the Kentucky lands to the trust company. That view is equally as conclusive, but, if it were not, we should have affirmed the judgment for the reasons we have stated.

Not only does (lie improvement company warrant against all defects of title to the trust company, in a deed made exclusively to secure the debenture bonds, but the Pine Mouniain Company, in conveying the lands to the improvement company, had done the same thing with this view, and in aid of the trust deed, which was so exclusively to secure the bonds; and, as against these warranties, it would be utterly impossible for tbe Pine Mountain Company to claim a lien in preference to the bonds, whatever it might do if it had been compelled, under other circumstances, to pay the lien claims which the improvement company had assumed.

For the reasons we have stated, the parties must be beld to have thus secured the bonds against all hazard by the warranties of a trust deed having no other object than their paramount security, this being the only legal effect of the recitals in the technical deeds, and fully sustained by the recitals of the previous memorandum contracts leading up to the deeds, which comes to the same thing we have said before, — that a vendor’s lien is never implied against warranties in any case where the circumstances show that the existence of such a lien could not have intended, and would be in antagonism to the manifested intention to clear the title of such impediments.

The reasoning of the learned judge in the opinion which comes up with the record is conclusive on this subject, and we need not repeat it here.

Along with the warranty, iii the mortgage for securing the bonds is a full reference to the previous deed of the Pine Mountain Company and the other contracts; the part of the original purchase money embodied in the bonds is segregated and secured by the lien of the mortgage, and not any other part of the consideration is mentioned as secured, and no other part was attempted to be secured in any specific way; additional security for the bonds is given by a certain pledging of the net proceeds of sales of stock; a certain optional mortgage on particular portions of the property, which shall be prior to the lien for the bonds, is provided for the assumed liabilities; a still further provision is made for the bonds by applying 25 per cent, of the net proceeds of sales of stock; and at last a further optional sale of town lots may be made for improving property, if the Pine Mountain Company “does not think the security for the payment of its bonds is thereby impaired;” Now, in the face of these concurrent deeds and contracts of February 1, 1892, these warranties must have been intended, in the hands of the parties themselves, to cover absolutely all defects of title, — as well the original vendors’ liens as others, — for this protection to the bonds was manifestly a part of the scheme.

Nor is it the least against this position that in the preceding contract of June 27, 1891, the vendors’ liens were expressly excepted from the promised general warranty of the property to be conveyed. Of course, the Pine Mountain Company did not intend to warrant against those liens known to exist, and which the grantee, the improvement company, agreed to remove in exoneration of the bonds; and of course, if the grantee failed in that obligation, and the grantor should pay the lien debts for the purchase money, it would have a right of sub-rogation to that vendor’s lien, as against the grantee.

But non constat that this lien, in the grantor’s hands, would be prior to the lien of the bonds, which both grantor and grantee had provided should be prior to all else, as we have shown.

As long as these vendor’s liens were outstanding in the hands of the original vendors, it was not within the power of the contracting parties to subordinate them to the lien provided for the bonds; but the moment they come into the hands of the Pine Mountain Company that subordination takes place necessarily, by implication, as much as if the contracts had said in plain words, “and if the Pine Mountain Company shall pay any of the liabilities assumed by the improvement company, as part of the purchase money, the liens attached thereto shall be subordinate to the lien hereby created in favor of the debenture bonds aforesaid/’ And as to the other consideration of purchase money, not included in the bonds, the “assumed liabilities,” and the rest, for the very same reasons precisely, whether under the Kentucky statute or the general law, if the Pine Mountain Company can be held to have any vendor's lien it is subordinate to the contract lien expressly given for the bonds by the selfsame contracts, as plainly as if the deeds bad said, “And any vendor’s lien existing hereby in favor of the Pine Mountain Company for any of the purchase money hereof shall be subordinate to the paramount lien herein provided for the debenture bonds aforesaid.” That is what was intended, and is-what tin; deeds do say, by the warranties, and by the numerous provisions indicating that purpose.

When Blake came into the scheme these contracts had already been executed so far that the bonds had been issued and distributed to the stockholders, and he entered with full knowledge of all the facts.

The most favorable attitude for him would he that of a purchaser of the claims from the original vendors, as if they had taken the Minnesota lands directly in payment, and assigned the debts to him, in which case he could not claim subrogation, because his improvement company liad assumed to pay them, and he was, in equity, on uo higher ground in relation to the lien of the debenture bonds; he being, on the facts here, substantially the locum tenens of that company. But, by his contracts and the scheme employed, he was in a far less favorable attitude than this.

The whole stupendous superstructure which has been constructed in this case, and by the argument of it for his relief, rests upon the defective foundation of an assumption that a vendor’s lien, because it is a vendor’s lien, is first in point of time, any and every where, as against any and every thing.

Possibly this might be so, in the hands of an original vendor, and in the first instance; but the parties may contract about it, and often do, utterly destroying it, sometimes unwittingly perhaps, or, by providing for preferences over it, may replace it in any scale of liens which may be devised according to their will, and the holding of it. by the equity of subrogation is always subject to any paramount equity which thus appears to have been set. above it. This view of the case practically disposes of all the questions in it.

We have not adhered, as was done in the argument, to the distinction between the hill for rescission and the intervening petition, because either is defeated upon this consideration of the nonexistence of any vendor’s lien paramount to the bonds, except in the hands of the original vendors to the Pine Mountain Company.

All the complaints of nonperformance by the Pine Mountain Company, urged as reasons for rescission, are the same substantially as those set up as grounds for the relief asked by the intervening petition, which it is difficult to classify, unless it may he called an application for specific performance, which it is not. Frey, Spec. Perf. § 21 et seq.

It prays that the Pine Mountain Company “shall pay to the holders thereof the said several lien claims, and other claims above mentioned, and assign and transfer the same to petitioner, and that the said several lien claims shall he adjudged in the hands of your petitioner as having a lien prior and superior to that of the Louisville Trust Company* and that the lands covered by said liens, respectively, shall be sold for the payment of the amount due on account of said claims, so as to be assigned and transferred to your petitioner,” and for general relief.

It is called in one of the briefs “defenses and set-offs against the foreclosure” of the mortgage, and in another “the contention that about $100,000 of claims purchased, etc., should be assigned to him, foreclosed, and declared prior to the $500,000 mortgage, etc.” And here again the fallacy of the whole contention appears in the use of the word “purchased.” Blake did not buy these claims, but paid them.

In the “suggestions as to the decree,” concluding one of the briefs, it is suggested — First, that the foreclosure of the bond mortgage should be delayed; secondly, that the various defenses and set-offs should not only be applied to reducing the bonded debt to be foreclosed, but primarily to the payment of the installment of interest, for the forfeiture of which the decláration of maturity of the whole debt was made, wherefore we infer that it is contended that the right of foreclosure now would be thereby defeated; thirdly, that the wrongful conduct of the Pine Mountain Company in reference to the Appalachian lease should be held to have excused the payment of interest, and therefore the bonds have not been matured; and, lastly, that the improvement company should be given a reasonably time to make another lease, and “save its properly from being absorbed by the Pine Mountain Company.” Whatever these suggestions, and the pleadings on which they are based, may be technically denominated, under the rules of pleading, or as descriptive of the equitable nature of the relief sought, they are not those of specific performance; but, regardless of any considerations of technical defects, they all depend on an assumed priority of lien, which does not exist, and cannot be ináde aváilable for all these formidable purposes.

As we have before pointed out, Blake has so identified himself with the improvement company as its owner and paymaster, and his contracts are so interwoven and inseparably connected with those of the improvement company, that it is impossible for a court of equity to specifically perform any one, or on any one side, without decreeing specific performance of all of them on all sides, and the first thing to order in this direction, and on the suggested lines of decree, would be that the improvement company should perform its existing obligation to pay the purchase money, which would relieve all the rest.

Its insolvency is a misfortune, no doubt,' but there is no equitable reason in this record for imposing that misfortune on the Pine Mountain Company by the process suggested, instead of leaving it with Blake, who voluntarily assumed the risk of that misfortune. The claim of set-off stands on no better ground, and to call the proposed performance by that name does not render it any more available in a court of equity.

If Blake had recovered a judgment at law for his damages for the alleged breaches of these contracts, and had execution with á nullá bóña return, and the Pine Mountain Company had still tjtie bonds in its exchequer, he might possibly reach them and their lien as ásséts of the company to pay its debts, but that relief is impossible here.

If he could procure such a judgment, even through these proceedings in equity, and were entitled to it, when the fact is known that he never came into the enterprise uni.il the bonds had been distributed to the stockholders, it would be an end of that relief, whether they are to be treated as innocent purchasers or not, for they are not parties to this litigation. He being a subsequent creditor, unless he can reach back and tie to the original creditors, ■ — which he cannot do until at least their debts are paid by somebody, ■ — we cannot see that he can complain of that distribution.

The complaint about the Appalachian lease is that the Pine Mountain Company would not consent that the improvement company should cut the timber for sale on the market to put it in funds to comply with its obligations under the lease to extend the railroad. The necessity for so raising money shows the desperate straits to which affairs had come, and the Pine Mountain Company might find justification for calling this a dangerous waste and impairment of security for the bonds. Whatever wrong there was, however, cannot be redressed in this proceeding.

All we can rule about it is that it is not a ground for a rescission of the contract, nor a set-off, in the present attitude of the case. Another cause of complaint in the case by Blake, in aid of his-demand for rescission or set-off, is that the trust to the Germania Trust Company was not drawn according to the memorandum agreement for that trust contained in the Blake contract. We have already pointed out that this is not a ground for rescission.

The decree of the circuit court has conformed the stipulations of the trust deed to the Blake contracts, and without that it is so obviously a right to have the trust administered according to the Blake contracts, as between the parties, drat the trustee, in settling its accounts, would be compelled to conform its dealings to the Blake requirements without such correction, though it is well enough to make them.

But this demand goes further, and it is denied that the trustee company had any right to advance money to the Pine Mountain Company to pay any debt Blake had not assumed to pay, or rather had not, by Ms contract, directed the trustee to pay out of the proceeds of the land; and this is undoubtedly true, and has been so, in effect, decided by the decree below, as we understand it.

The further complaint under this head, that the trustee had no right to advance any money for any purpose, not even to pay what we may call the Blake claims, is not so clear, and we need not now decide it; for we are not, in this proceeding, taking any accounts of the trustee, or making any settlement between the parties, nor administering that trust, and what may or may not be credited by or charged to the trustee cannot be now determined.

All we have before us is that this objection, whatever force there be in it, is not a ground of rescission or preference or set-off, as against the lien of the debenture bonds. Finally we come to the question so much litigated and argued, arising out of the superimposed mortgage made by Blake after the Minneapolis lands were appraised, and before the final deed was made. We agree with the circuit court that Blake had no right, under a proper construction of the contract of August 10, 1892, to place that mortgage on the property.

The circuit court thought that the right of Blake to impose a mortgage within the limit of $20,000 was foreclosed by the appraisement, while the appellant Blake contends that, up to the final deed, he might properly place the mortgage. Much proof has been taken to show what the parties intended, upon the theory that, the language being ambiguous, it may be interpreted by the light of the facts. Either side simply testifies to its own construction, and if we should go into the proof it would be more difficult to determine where the intention lay, than to find it from the documents themselves.

It is not an impossible inference from the proof — indeed, it may be probable — that Blake had it in his mind to do what he did do, but it is certain that that intention was not expressed in the contract, nor is it necessarily to be implied from it, and it is quite as certain that he never disclosed that intention or that desire to the Pine Mountain Company. On the other hand, it is altogether certain that the Pine Mountain Company did not understand that to be a right of Blake, and did not intend to contract that he should have what his counsel calls “an option” to do that thing.

It was certainly contrary to the interest of the Pine Mountain Company to give Blake that privilege, and it will not be held to have done it without the words used bind it to that construction, or unless it is a necessary implication from within the four corners of the instrument. The parol proof may be looked to when an ambiguous expression is to be interpreted, but not to supply omissions, except where there are format proceedings, and the jurisdiction to reform the words and phrases used, which must be done before construction takes place.

There is a conclusive presumption that parties have put their whole agreement in writing, and previous negotiations are merged in it. Certainly any undefined, concealed, or unexpressed designs or intentions cannot be added by parol to words of a stipulation that import a consistent and sensible meaning within the scheme of the writing itself. * Bailey v. Railroad Co., 17 Wall. 96, 105; Baker v. Nactrieb, 19 How. 126; Richardson v. Hardwick, 106 U. S. 252, 1 Sup. Ct. 213; De Witt v. Berry, 134 U. S. 306, 10 Sup. Ct. 536; Forsyth v. Kimball, 91 U. S. 291; Insurance Co. v. Mowry, 96 U. S. 544, 547; Seitz v.

Machine Co., 141 U. S. 510, 12 Sup. Ct. 46; Clay v. Field, 138 U. S. 464, 11 Sup. Ct. 419; Manufacturing Co. v. Soxman, 138 U. S. 431, 11 Sup. Ct. 360; Bogk v. Gassert, 149 U. S. 17, 13 Sup. Ct. 738; Hazleton Tripod-Boiler Co. v. Citizens’ St. Ry. Co., 72 Fed. 317, 323. Nor is there anything enlarging this authorized use of parol testimony in interpreting contracts to be inferred from the general expression used in Le Roy v. Beard, 8 How. 451, 466, or Goddard v.

Foster, 17 Wall. 123, 142, about aiding the language employed by proof of the situation of the parties, the acts of the parties themselves, and “any other circumstances having a legal bearing and throwing light on the question,” nor in its repetition in Runkle v. Burnham, 153 U. S. 216, 224, 14 Sup. Ct. 837. Neither of these cases is at all inconsistent with those we have cited from the supreme court of the United States. If the testimony here be admissible, it only confirms the

interpretation we give the contract apart from if, by showing conclusively that there was no agreement of the parties, mutually understood, that Blake should have a right or “option” to put mortgages on the land to be offered, so long as he did not exceed the limit. Their minds never consciously came together on that point, whatever might have been in either mind on that subject. Apart from all the testimony, the contracts are quite clear on the point.

The ordinary rule is that contracts speak in prmsenti, from the date of their execution, unless they themselves indicate some other time, which is only saying, however, that all men, in all things, using the language of the present, mean the present, unless the contrary appears. “We are all of opinion,” said Baron Pollock, “that the deed must be taken to speak from the time of its execution. That is the plain

interpretation of what was done by the parties. It is the same as if, on the day of the execution of the deed, a person had heard the defendant use the language contained in it.” Jayne v. Hughes, 10 Exch. 430. 433. Thereby was saved to the plaintiff a bar of the statute of limitations. And so the habendum of a lease was not allowed to relate back to the date of the commencement of the tenancy in fact, so as to bring a destruction on the premises prior to its date within the protection of the covenants. Shaw v. Kay, 1 Exch. 412.

Although the contract of August 10, 1802, is not a deed conveying lands in prmsenti, and indeed is only an agreement to convey in futuro, and speaks of the conveyance to be made thereafter, it is a contract acting in the present in its obligation to do on either side the things to he done by each, and was intended to speak of 1he conditions then existing, and that which was to be done thereafter by either side was only to be done in future because it required time to complete the present performance.

It did not specify the lands to he conveyed by Blake, on the one hand, nor the claims to he paid by the Pine Mountain Company, on the other, with any specific description, and only in a general way, because in the nature of the situation, as to each the description had to be general, and provision was made to insert the particulars, so to speak, when they could be described specifically. The lands were to he pointed out and appraised, the hooks to he examined' for the claims to bo paid.

It might just as well be claimed that after August 10, 1891, the Pine Mountain Company could create new debts, which Blake must pay, to make up the $100,000 of assured liabilities, as to claim that Blake might create new incumbrances to make up that limit. The $100,-000 was (he maximum limit, hut, if the debts described should be less, Blake did not have to pay more.

So the incumbrances were limited to one-half the fair market value, as per appraisement on any single tract, and the aggregate on all should “not exceed” $20,00(1, as the debts assumed were “not to exceed” $100,000, following the language of the original contract between the improvement company and the Pine Mountain Company. The present existence of the debts to be assigned is more specifically pointed out, it is true, because the words “now liable” are used in that connection, but none the less implied is the correlative obligation to convey the lands as then existing in respect of incumbrances.

The contract provides, in its very words, that the aggregate of incumbrances "existing” against said property shall not exceed $20,000, which word is quite as significant as the words “now liable,” albeit not so absolutely certain in its significance, but only because of the omission of the word “now.” It was the opinion of the circuit court that Blake had power to create mortgages up to the appraisement, but not after. We think he had no power to create any after August 10, 1892. The whole instrument -shows that it speaks of titles and incumbrances of that date.

The parties were “to proceed at once to Minneapolis, Minn., and upon arrival there said second party is to furnish list and description of the real estate by lot, block, and subdivision. The property is to be pointed out, value determined, titles examined, and conveyances made by good and sufficient warranty deed as soon as practicable in the ordinary course of business.” So it is throughout. The language implies present conditions, not future conditions; and provision is made for speedy removal of defective titles, or the immediate substitution of other property without defects.

On the other hand, the obligations to be paid by the Iron Mountain Company are to be speedily ascertained. If less than the $100,000 “at the date of this agreement,” a pro rata share of the real estate is to' be reconveyed, and the debts are to be paid “within thirty days,” or within that time from future maturity. Everything speaks of accomplished conditions to be immediately adjusted to this agreement, and there is ho indication of changing the facts on which the conditions rest by the action of either party.

In other words, the contract speaks in prmsenti, and takes effect as if the parties had been heard to make the statements of that date; and all that is future is merely administrative, adjunctive, and auxiliary, and not creative.

Much stress is laid on the words “shall not exceed,” as relating to the incumbrance; the form indicating future action, and thereby creating this “option.” But this is not a necessary implication as against all the rest of the document, and even grammatically the word “shall” may be used in the preterit present sense of “must,” of which it is a synonym, and not always, or perhaps not most frequently, in the auxiliary future sense which is now urged here. Cent. Diet. The subsequent contract of October 25, 1892, does not change this feature of the other in any sense.

Neither party had carried out the commands of the first, no matter for what cause, whether because of the dispute about this “option,” and Blake’s assumption to exercise it by creating a mortgage up to the limit, or otherwise, and this subsequent contract reserved that dispute for subsequent settlement by litigation. Therefore the question wholly depends on the construction of the document of August 10, 1892.

We do not say that it might not have been a fair inference from the document itself, interpreted by the “light thrown upon the question” from the parol proof, that Blake could “point out” other lots or parcels than those he owned himself on the 10th day of August, 1892, nor that he might not, after that date, acquire property to be included; and possibly, when so acquired or used, if incumbrances existed at the date of acquisition the other side might have been compelled to take them, because of the general description of the thing sold, and the elasticity of choice of lots to he offered for appraisement; but that would be an altogether different thing from that of Blake himself creating a mortgage on the whole offering subsequent to August 10, 1892, merely to reach the utmost limit allowed.

So important a privilege as that should have been definitely expressed, and, not being so, cannot be implied. What is to be the effect of this ruling of the circuit court, which we approve, when it comes to making a decree upon that fact, — -that Blake violated the contract by placing the mortgage, — is a question of greater difficulty than the construction of the contract. Practically, it does not seriously involve the decree, since in this proceeding the trust of October 25, 1892, to the Germania Trust Company is not being administered at all.

Technically, courts of equity, in exorcising their power over trusts, may construe wills and deeds of trust:, but generally not contracts in which there is no element of trust, such as the contract of August 10, 1892, is. Yet the parties seem in the contract of October 25, 1892, to have proceeded upon the theory that there was some such equitable remedy; for, in the reservation between them of this dispute from that settlement, Blake consents to enter his appearance "to such action” in the chancery court, subject to removal to the federal court.

Of course, they could not confer the jurisdiction bv contract or consent. Technically, again, perhaps the only remedy to settle the dispute was an action at law by the Pine Mountain Company against Blake for a breach of the contract. What would have been the measure of damages is not certain, until the developments of fact should show what had resulted in the way of damage. Obviously it could not be measured by the lump sum of the mortgage imposed, because the lands might be enough, notwithstanding, to pay the debts, and Blake be entitled to something hack under the contract.

Under the first o£ the two contracts there was a stipulation that, if the debts should turn out less than SI00.000, Blake was to have lands reconveyed in proportion according to the appraisement, and while the Pine Mountain Company took them absolutely, and was to pay the outstanding debts speedily and absolutely, it was subject to this condition, and therefore the amount of the superimposed mortgage would not measure the damage. Nor would it under the second of the two contracts, when the Germania Company, as trustee, undertook to sell and apply the proceeds to the payment of the debts.

Perhaps a court of law could have measured the damage by a process of valuation, and, if a court of equity should take charge of the dispute, it might have to find the same measure of damage. But that has not been done, and until it has been done the amount Blake is to pay has not been ascertained. The decree below directs “that J. D.

Blake shall forthwith cause to be removed from the property embraced in the deeds executed by him to the Pine Mountain Iron & Goal Company, and referred to in said agreement of October 25, 1892, all incum-brances created by the mortgage of said Blake for $17,290, so that the said property shall stand free and released from any claim by reason of the execution of said mortgage by the said Blake.

The said mortgage is the same that was executed by said Blake to the Metropolitan Trust Company of Minneapolis, Minn., dated 29th day of August, 1892.” If Blake had been directed to bring the instrument into court to be canceled, or to execute some release or deed, or what not, perhaps the court could have compelled him thus “to remove” the mortgage, if it might proceed effectually to decree upon titles to land in another state, and in the absence of the mortgagee or those holding under him, but it does not do this. It, in effect, commands Blake to remove the mortgage by paying the mortgage debt.

Undoubtedly the court had power to determine the point of litigation on the bill for rescission and the pleadings in that case, as an incident to the granting or denial of that relief, for the Pine Mountain Company pleads the wrongful mortgage as a defense to Blake’s complaint of its nonperformance.

We hold that he has no equity of rescission, whether the mortgage be rightful or wrongful; but if there had been grounds for it, and this wrongful mortgage did impede performance, as no doubt, in its natural effect, it would tend to do, if the property were close in its margins of value, it would be a defense to the bill, and the court might so declare.

The cross' bill of the Pine Mountain Company asks to have the contract of August 10, 1892, reformed by showing the true agreement in this respect; and, more than this, we think the point is within jurisdictional judgment upon Blake’s intervening petition or cross bill asking to have the trust deed to the Germania Company reformed to comply with the stipulations of the contract between him and the Iron Mountain Company.

In that contract this very dispute was reserved for adjudication in some form appropriate to a court of equity, and while, in the strictest technical sense, it is possible that the trust created by the deed of trust is disconnected with that dispute, and the trustee could proceed in administration without its settlement, still on the rescission bill we have hold of the question, and on the pleadings otherwise it is in litigation; so we think we need not remit the parties to a court of law, but may, in reforming the trust deed, note this stipulation, and give effect to it by directing a declaration in the trust deed that the imposition of the mortgage was unauthorized, and the trustee is directed, in any settlement of his accounts with Blake, to proceed on that basis of settlement, leaving the parties free to act as they may be advised to secure any further relief to which they may be entitled in that behalf.

The decree of the circuit court will be affirmed, with costs to be paid by the appellant.