By the Court
Warner, Judge.*This case comes before the court on a bill of exceptions and writ of error to the decision of the Superior Court for the county of Bibb, distributing the proceeds of the sale of the property of the Monroe Railroad and Banking Company. It appears, from-the record in the cause, a bill was filed on the chancery side of said court, at the instance of the company, to have the road and its appurtenances ¡sold for the benefit of its creditors, and at May Term, 1845, a decree was made by the court, ordering a sale of the road, from Macon to its terminus in the county of De Kalb. This decree declares, that the creditors of said company, “ if any controversy should arise respecting their claims, should litigate *455among themselves, in respect to all objections which would, or might have been, available against, them by said company, if said sale had not been made in relation to matters of set-off, and whether they be subject to objections on account of the statute of limitations, non-performance of contracts, or other cause; embracing the quantum of consideration paid for the claims, or any of them, and also, that the liens claimed by the respective creditors, be then and there also investigated and adjudicated.”
In pursuance of this decree, the court, at its May Term, 1846, proceeded to distribute the fund, arising from the sale of the property, among the several claimants, one of whom was Collins, the plaintiff in error, and his co-contractors, who excepted to the decision of the court below.
First — “ Because the court ruled and decided that the clause in the charter of said Monroe Railroad and Banking Company, declaring that said road should be pledged and bound for the redemption of the bills or notes of said company, created a specific and paramount legal lien on said road over all other liens.”
• In the year 1833, the Legislature granted a charter to the Monroe Railroad Company, to construct a railroad from Macon to Forsyth. In the year 1835, another act was passed amending and reviving the act of 1833; and, in the year 1836, another act was passed, amending and extending the provisions of the original charter, and conferring upon the company banking privileges. By the 22(1 and 23d sections of the last-mentioned act, the charter of the Monroe Railroad Company is declared to be continued in force, in all matters in which it does not conflict with the provisions of the latter act; the two acts, therefore, when not in conflict, will be considered as one act, and construed accordingly.
By the 11th section of the amended charter it is declared: “'The railroad to be built by said company, from Macon to Forsyth, together with all the revenue arising therefrom, and all the property, equipments and effects therewith connected, shall be pledged and bound for the redemption of the notes or bills, issued by or from said company, and for the redemption of the same.” — Prin. Dig, 372. The words “ pledged and bound," used in this section of the charier, taken in their common acceptation, or in their legal signification, leave no doubt upon our minds as to the intention of the Legislature. The road to be built by the company, and all the rights of the company connected therewith, which would, in Law, be subject to the payment of the debts of the company, were intended to be pledged and bound for the redemption of the notes or bills issued by the company; and in our judgment, so much of the proceeds of the sale of sajd road, built by said company, and equipments and materials furnished by them, ought first to be applied to the claims of the bill-holders. That the bill-holders, under that section of the charter, acquired all the rights which belonged to the company, but no other, and to that extent only, we are of the opinion the decision of the court below was correct.
This brings us to the consideration of the 2d, 3d and 4th grounds of exception taken to the decision of the court below, which are all mainly included in the 4th exception, which is: “Because the court ruled and decided that the work and labor done on said road, and materials and iron furnished and put on said road by the contractors, to whom said mortoasres were “liven, which said work was done, and materials fur*456nished, after the insolvency of said Railroad and Banking Company, was liable and subject to the payment of the bills of said company, in preference to said mortgages or debt, for said work and materials.”
The whole road, together with all the equipments, was sold, and the proceeds of the sale are now in the hands of a court of equity for distribution the question is, whether the contractors, who donei work and furnished materials on the road above Griffin, after the insolvency of the company, ought to have been postponed, to the bill-holders, to the extent of the relative value of such work and materials, to the whole fund in hand. The paramount object of the Legislature/in granting the charter to the company, was, to advance the public interest by the construction of the road. The completion of the road was the inducement for the grant; the banking privilege was conferred on the company as a means to enable them to carry out this great work of internal improvement, for the benefit of the public.
The record, however, informs us, that before the completion of the road, the company became insolvent, whereby they were wholly unable to go on and finish the work, and the objects of the Legislature were about to be frustrated. During this state of things, the plaintiff in error and his co-contractors enter into a contract with the compás^ to complete the road, from Griffin to the terminus in De Kalb, furnish iron, equipments, and all necessary materials. This contract was entered into on the 2d day of August, 1842, and by one clause thereof, it was stipulated, “ that the whole of the Monroe Railroad, from Macon to the point of junction with the Western and Atlantic Railroad, and all and every part thereof, and all of the appurtenances, engines, tenders, cars, shops, tools, implements of every kind connected, or to be connected, and all real estate to the same appertaining, and all other effects to the same appertaining, shall be, and is, beieby conveyed and vested in the said parties of the second part, in full title and estate, until all the dues and payments, to which they shall become entitled under this contract, shall have been fully met and satisfied. ”
By the 11th section of the original charter, (Prince Dig. 317,) the company have the right, “ when they see fit, to rent, or farm ont, any part, or the whole of their said exclusive right of transportation on said railroad, with the privileges thereof, to any individual or individuals, Or other company, subject to the rates above mentioned.” The company, under this clause in the charter, would not have had the right to have rented or farmed out their privileges, granted by the Legislature, so as to have defeated the object and intention thereof; hut the farming it out to the plaintiff in error and his co-eontractors, for the purpose of constructing and completing the road, was, in our judgment, legitimately carrying out the views and Intentions of the Legislature, in granting the charter to the company.
The company, in consequence of their insolvency, were unable to complete the road, and it is, together with the privileges thereof, farmed out, or let, to the plaintiff in error and his associates, for the purpose of having the same completed to the terminus of the State road in De Kalb ; the contractors having the full title and estate therein, until all the dues, and payments, to which they shall become entitled, under their said contract,, shall have been fully met and satisfied. In pursuance of this contract, the plaintiff in error, and his associates, expended large sums, in and *457about completing said road, from Griffin to the terminus of the State road in De Kalb ; furnished several tons of railroad iron and other materials ; dgne several miles of grading ; furnished timber, and built several miles of superstructure ; — all of which was sold, with the road, and contributed to swell the fund, now in the hands of the court for distribution ; but, under the decision of the court below, were denied any participation whatever in the distribution thereof, notwithstanding their work and labor, materials and equipments furnished by them, were sold under the decree of the court, and thereby contributed directly to increase said fund ; the court below being of the opinion, the bill-holders had a prior lien thereon, to the contractors who done the work on the road, furnished iron, materials and equipments, as before stated, from Griffin to the terminus of the State road in De Kalb.
We have already shown, the bill-holders had a prior lien, under the 11th section of the amended charter, to the proceeds of the sale of so much of the road as was built by the company, materials and equipments furnished by them; nor could the company, by contract made in 1842 with the plaintiff in error and his associates, defeat such lien, because the lien of the bill-holders was of prior date to the contract, on so much of the road as was built, materials and equipments furnished by the company ; that portion of the road, however, built by the plaintiff in error and his associates — the materials and equipments furnished by them, on that part of the road above Griffin, to the terminus of the State road — was not built by the Monroe Railroad and Banking Company ; nor were the materials and equipments furnished by the plaintiff in error on that portion of said road, furnished by “ the company ;” nor was the company entitled to the same, until payment was made therefor, according to the stipulations of the contract, made on the 2d August, 1842. Although it was not competent for the company to make a contract, in 1842, to defeat the lion given by statute to the bill-holders, on that part of the road built by the company, up to the time of its insolvency ; yet it was competent for the company to carry out the intention of the Legislature, in the completion of the road, by making a contract which would give the undertakers a lien on such portions of the road as such undertakers should thereafter build, until they were paid therefor. It was competent for the company to stipulate, by express agreement, the contractors should have a Hen on that part of the road which they contracted to build, to the extent of the work done, and materials furnished, until payment was made by the company for such work and materials. — Kirkman vs. Shawcross, 6 Term. Rep. 14; Green vs. Farmer, 4 Burrow Rep. 2220; 1 Story's Eq. 483, sect. 506. In Green vs. Farmer, Lord Mansfield says: “ The convenience of commerce and natural justice, are on the side of liens, and, therefore, of late years, courts lean that way. 1st. Where there is an express contract; 2dly. Where it is implied from the usage of trade ; or 3dly. From the manner of dealing between the parties in the particular case.” This contract, made on the 2d of August, 1842, between the company and the plaintiffs in error, giving the latter a lion on that part of the road they should build, until paid for the same, and materials furnished, does not at all conflict with the lien created by the statute on that part of the road built by the company ; nor would the company have been entitled to that portion of the road, built by the contractors above *458Griffin, until payment made to them therefor. Certainly, the bill-holders, who are the creditors of the company, cannot be considered as standing, at least in a court of equity, in a better convdi.tjpn than the company under whom they claim. If the company could not appropriate the road, built by the contractors, to their own use and benefit, until payment for the work and materials, on what principle is it the bill-holders, claiming under and through the company, can justly claim, in a court of equity, to have exclusively appropriated to their benefit, the proceeds of the sale of such portion of the road and materials ?
We cannot bring our minds to the conclusion, the Legislature intended to.,create a lien on any portion of the road, materials, or equipments, in favor' of the bill-holders, that was not built, or furnished, by the company. It was not intended to violate that principle of natural justice which exists in favor of those whose labor constructed the road, and who furnished materials and equipments therefor, after the insolvency of the company, under an express agreement, that those who should perform such labor, and furnish such materials, should have vested in them the full title and estate thereto, until all the dues and payments to which they should become entitled, under such agreement, be fully met and satisfied. This agreement, too, was calculated to carry into effect the leading object of the Legislature, in completing the road, when the company, to whom the charter was granted, by its hopeless insolvency, forbid the accomplishment of the just expectations of the public in that regard. Nor did the bill-holders take the bills on the faith, or credit of that portion of the road built, or materials furnished by the plaintiff in error, or his associates, under the agreement of 2d August, 1842;- for the record shows the company was wholly insolvent at the time, and if the road had been then sold, the fund would not have been increased, by the labor and materials furnished thereon by the plaintiff in error ; but, on the contrary, would have been diminished to that extent.
The effect of the decision of the court below is, to place the bill-holders, with respect to the road above Griffin, built by the plaintiff in error, in a better condition than the company under whom they claim; for the company co'uld not, under the agreement, be considered the owners of that portion of the road, materials and equipments, built and furnished by the plaintiffs in error, until they had paid for the same. On what principle of equity, or' of morals, is it, then, that the bill-holders, who claim under'or through the company, can appropriate to themselves the proceeds of such portion of the road and materials, without first paying the plaintiff therefor ? Will it be answered, The statutory lien, under the 11th section, of the charter, confers the right ? That section only gives the bill-holders a lien on so much of the road, materials, equipments, &c., as shall be built and furnished by the company ; and, we have already shown, that portion of the road above Griffin, built by the plaintiffs in error, and the materials and equipments furnished thereon by them, was not built by the company, nor Were the materials or equipments furnished by the company, nor did that portion of the road, materials, or equipments, belong to the company, until payment was made therefor, in pursuance of the agreement, which is not pretended to have been done.
Inasmuch, therefore, as that portion of the road above Griffin, which was built by the work and labor of the plaintiffs in error, as well as the *459materials and equipments furnished by them, has been sold, together with the wholes road, and the proceeds thereof thereby constituting a relative proportion of the whole fund, now in the hands of the court for distribution, wo are of the opinion the court below committed error, in excluding the plaintiff in error and hi; associates from receiving a relativo proportion of said fund ; that the plaintiff in error and his associates, in our judgment, have a prior and superior equity to the bill-holderK, to be paid out of said fund, to the extent, and in proportion to the relative value, of the work done by them on said road, materials and equipments furnished by them, between Griffin and the terminus of the road, in the county of De Kalb, to be apportioned in the manner hereinafter stated, in the judgment of this court.
The 5tli exception to the decision of the court below is : “ Because the court ruled, and decided, that the bank-bills should each take in proportion to the value received by the bank for it, at its emission by the bank, whereas the original decree fixes the quantum of consideration paid for the bills by the claimants, as the amount to be received.”
The original decree, ordering the road to be sold,further directs : “ that the creditors of the company, if any controversy should arise respecting their claims, should then litigate among themselves, in respect to all objections, which would, or might, have been available against them by said company, if said sale had not been made, in relation to matters of set-off; and, whether they be subject to objection on account of the statute of limitation, non-performance of contract, or other cause, embracing the quantum of consideration paid for the claims, or any of them; and, also, that the liens claimed by the respective creditors be then and there investigated and adjudicated.”
It was urged at the bar, the court should adopt thq rule in cases of bankruptcy for its government; in this case, that notwithstanding a party purchases a bill, or note, for less than its nominal value, yet, in the distribution of the bankrupt’s effects, he is entitled to receive the full amount thereof; and Cooper’s Bankrupt Lato, 201-5, was cited. Whatever may be the rule in cases of bankruptcy, we think this case stands on a very different footing. Here is a fund, raised under a decree made by a court of chancery ; and a distribution of that fund is being made, in accordance with the terms of that decree. The court having the jurisdiction and authority to direct a sale of the property, and thereby create the fund, has also the same power and authority, to direct the manner in which such fund shall be distributed.
One of the grounds of application to the court for a sale of the road was, that the company was insolvent, and unable to pay its debts. With the intent to measure out justice to the respective claimants as far as practicable, knowing there would not be sufficient to pay all, the court declares the claimants on the fund shall litigate .among themselves, and that the liens of the respective creditors should be investigated and adjudicated by the court, “ embracing the quantum of consideration paid for the claims, or any of them. ” It is under the authority of the decree, made for the sale of the road, the court proceeds to investigate and adjudicate the liens, claimed by the respective creditors on said fund.
Why shall not the court also embrace, in its investigation and adjudication, the “ quantum of consideration paid for the dlaitns, or any of them” *460as directed by the decree ? Is one portion of the decree more binding on the court, in making a distribution of the fund, than another; and if so, on wbat principle is it made more binding ?
Independent of the decree itself, we are of the opinion, the clear equity of the case is in favor of distributing the fund among the respective bill-holders, in proportion to the quantum of consideration paid for the bills by the respective holders thereof. Although the funds in the hands of the court cannot, perhaps, be technically considered as equitable as sets, yet, being raised under the decree of a court of equity, and under its control, a proper regard should be had to the fundamental principles of equity in making a distribution of it. If the fund was sufficient to pay all the claimants, there would be no difficulty ; but there are many who must go unpaid. Shall the bill-holder, then, who paid but ten cents in the dollar for his bills, exhaust the whole fund, or a majority of it, by receiving the full amount of his claims: that is to say, receive one hundred cents out of the fund for which he paid only ten ; while he who paid one hundred cents in the dollar for his claims gets no more. In other words, has he who paid but ten cents in the dollar for his bills, the same equitable claim on the fund as he who paid one hundred cents in the dollar, when the fund is not sufficient to pay all ? In Davison vs. Watson, the plaintiff, a bond creditor of the testator, compounded with the other creditors, and they executed an assignment to him of their debts. On the hearing, the usual decree was made : “ The legatees obtained an order on petition, that the minutes of the decree should be added to, by directing an inquiry, whether the said plaintiff had purchased from, or compounded with, any of the creditors of the testator for their debts, and what consideration was really paid, or given, for such debts; and a declaration, that what the master should find to have been actually advanced, paid or allowed by the said plaintiff for such debts, and no more, was to be allowed to him in respect thereof.” — 2 Smith Chan. Prac. 265.
In making an equitable distribution of the fund, therefore, under the original decree, amongst the bill-holders, we are of the opinion, the quantum of consideration paid therefor by the respective claimants, at the time (hey become the holders of said bills, should constitute the value of their claim on the fund; and not the value received by the bank for such bills, at the time of-the emission of the same.
The sixth and last exception is : “ Because the court erred in deciding that the said bills set apart as collateral security, to secure the work, labor and materials found and furnished,on said road, had not been legally issued by said bank, and therefore could not claim any of said fund.” On looking into the manner in which this security was taken by the plaintiff in error and his associates, as disclosed by the record, we are decidedly of the opinion they are not entitled to receive any portion of said fund as bill-holders. The bills were not issued, as was contemplated by the charter of the company, and the manner in which they are now attempted to be used for the purpose of placing the holders thereof on the same footing as the holders of bills, issued and put in circulation as money, according to the terms of the charter, cannot receive the sanction of this court: to permit it would be, in our judgment, to sanction a fraud on the rights of those bill-holders, whose bills were legitimately issued, and put in circulation as money, according to the terms and provisions of *461the charter. On this ground of exception taken, we most cheerfully concur in opinion with the court below.
This cause came on to be heard on the transcript of the record from the Superior Court of the county of Bibb, and was argued by counsel: Whereupon it is considered and adjudged by the court, that the judgment of the court below be reversed, on the following grounds : First, Because it is the opinion of this court, that the bill-holders had a paramount lien only on the fund, raised by the sale of the railroad from Macon to Griffin, and so much only of the road from Griffin to the terminus in De Kalb, as was built by the Monroe Railroad and Banking Company, prior to the 2d day of August, 1842 ; and that the contractors of the second part, under the agreement of the 2d of August, 1842, in the record mentioned, had a prior anc| superior equity to the bill-holders, to be paid out of said fund, in proportion to the relative value of the work done by them on said road, and materials and equipments furnished, between Griffin and the terminus of the road, in the county of De Kalb ; and that the court below committed error, in excluding said contractors from any participation in said fund, to the extent of the relative value of their claim for work and labor done, and materials and equipments furnished said road, between the city of Griffin and the terminus of the road in De Kalb as aforesaid.
It is further the judgment of this court, that the relative value of the work and labor done, and materials and equipments furnished said road, by said contractors, between the places lasl aforesaid, be apportioned by three commissioners, to be appointed by the court below, with power to hear evidence in relation thereto; and make report thereon, within such time as to the said court, shall be deemed expedient.
Second, Because the court below committed error in deciding, “ that the bank-bills should take, each in proportion to the value received by the bank for it, at the time of its emission by the bank.” It being the opinion of this court, that each bank-bill should take in proportion to the quantum of consideration paid therefor by the holder, or claimant on the fund ; and that such holder, or claimant, should state the quantum of consideration actually paid therefor, on oath in writing, with the right of other contesting claimants for said fund, to traverse the same.
Lumpkin, Judge, being a bill-holder of the Monroe Railroad and Banking Company. gave no opinion in this case. After the judgment of the court was delivered, tho same being adverse to his interest, Judge L. gave it his public approbation ; desiring and designing to, share with the court the responsibility attaching to the opinion delivered.