(dissenting):
I agree with Mr. Justice Cochrane in his conclusion that under the circumstances surrounding the making of the order permitting the receiver to issue certificates to the extent of $250,000, he was not thereafter justified in exceeding that sum even for paying the necessary running expenses of the road, and hence that the court erroneously directed the payment of certificates amounting to $25,471.84.
I am unable, however, to concur with him in a reversal of the order so far as it affects the certificates amounting to $35,000 which were issued by the receiver pursuant to the order of July 30, 1903, which order was subsequently reversed by this court (88 App. Div. 208). To the extent at least of the $32,936.72 which went directly to pay interest on the bonds due May 1, 1903, the holders of the certificates should be protected. The trustee which represented the bondholders was before the court- on the making of that order. The order was not void for lack of jurisdiction but was a good order until it was reversed and it protected all parties. The certificates were issued before the reversal and the purchasers and holders of them were innocent parties and under no contractual obligation to pay interest on the bonds. They purchased the certificates before the order was reversed and the money which they paid for them went direct to the trustee of the bondholders to pay past due *700interest on the bonds. It was on the appeal of the trustee representing the bondholders that the order was reversed.' If the transaction had been direct between the parties to the action' and the money had been paid pursuant to the direction of an order the-court would have ordered restitution upon reversal. But the money in the present instance was furnished by an innocent third party. The trustee represented the bondholders and received and retained the money of such innocent third party and applied -it to reduce the bondholder’s claim. It does not seem to me an answer to say that the bondholder did not want his debt paid and preferred that the principal should become due from default in paying interest. The facts now disclosed show that the bondholder never was amply secured and never could receive his full principal with interest because the road has been sold for a mere fraction of the bonded indebtedness. It, therefore, stands that those who purchased-the receiver’s certificates and furnished the money thereon being under no obligations so to do, paid a part of the indebtedness held by the bondholders against the railroad. It seems to me on every equitable principle that they should be subrogated to the rights of the bondholders, which would be accomplished by permitting their certificates to be paid out of the avails of the sale in priority of the bonds. Surely the advancing of money to pay the debt of another upon the faith of an order of the court, although it may subsequently be reversed, puts the party so advancing in no worse position than he would be had he advanced the money on a forged check; for example, the Court of Appeals in the recent case of Title Guarantee & Trust Co. v. Haven (196 N. Y. 487) even went to the -extent of saying that an innocent third party under no obligation to pay municipal assessments' upon the real property of another was subrogated to the rights of the municipality on having cashed a forged check, the avails of which went directly to the payment of such assessments. .
The situation presented is not such as existed in Union Trust Company v. Monticello & Port Jervis Railway Company (63 N. Y. 311), where an unauthorized attempt was made to sell or pledge the coupons without the knowledge and against the will of the bondholder, Nor is it like Morgan's Co. v. Texas Central Railway (137 U. S. 171) where the money was simply loaned for general or specific *701purposes of the corporation with the expectation of repayment from operation of the road ; nor similar to Newburgh Savings Bank v. Town of Woodbury (173 N. Y. 55) where the plaintiff loaned money to a municipality which voluntarily paid it over under a void law to third parties with whom neither the town nor the plaintiff had any privity as the courts finally determined. In the present ca'se it was the duty of the receiver to pay the coupons of the bondholders because they were legal obligations of his railroad. He sold the certificates to do so but it turned out the court made a mistake in ordering him to do it. It was a mistake of fact or of law and fact combined. The mistake was certainly mutual as between the receiver and the purchasers of the certificates and the latter advanced their money in good faith relying upon the validity of an order which was finally held to have been, improperly granted.
The avails of the certificates to the extent of $32,936.72 having gone directly to pay the indebtedness held by the bondholders against the railroad, I think to that extent the court was right in directing priority in distribution over thé bonds.
I, therefore, "vote for a niodification of the order as indicated instead of for reversal.
Sewell, J., concurred.
Order reversed, with ten dollars costs and disbursements, and matter remitted to the Special Term. •