Opinion,
Mr. Justice Williams :This case involves the title of the defendant company to the franchises, right of way, and other property of the Pensnylvania and New England Railroad Co. The facts on which the controversy arises are as follows : On May 5, 1880, the Pennsylvania and New England Railroad Co. was organized under the general railroad laws of the commonwealth. What became of its capital stock, if it was honestly organized, or in what manner the laws were evaded, if it was not, are subjects upon which the paper-books afford no light; but on June 1st, about as soon as the blanks could be prepared, the company issued coupon bonds, payable in 1910, to the amount of one million one hundred thousand dollars. The interest was payable semi-annually, on the first days of June and December. To secure the payment of these bonds with their interest, the company executed a mortgage to trustees covering their corporate franchises, rights of way and other property, with the usual covenants and stipulations, among which was the following provision: “ If default be made in the payment of any of the said coupons or instalments of interest as aforesaid for a period of one year, it shall be the duty of the trustees, or the survivor of them, or their successors, upon the written request of the holders of bonds upon which interest shall remain unpaid, representing bonds to the amount of three hundred thousand dollars (§300,000) then outstanding, to sell and dispose, of said mortgaged premises, .... the equity of redemption being hereby waived and released on the part of said company, and full authority to sell as aforesaid being vested in said trustees, and apply the proceeds of said sale to the payment and satisfaction of the principal and interest in said bonds.” On June 1, 1881, just one year from their date, the company made default in the payment of the interest on their bonds and have remained in default ever since. Such is the suggestive story of this corporation, save only that it does appear that enough of the funds of the company were devoted to corporate purposes to build one mile and one sixth of a mile out of the 107 miles of the main line projected by it.
*318The defendant company claims title to the franchises and property of the Penn. & N. E. R. Co., by means of a sheriff’s sale founded upon a judgment for unpaid interest on eighteen of the coupon! bonds. It appears that on June 3, 1881, after the default in payment of the interest, Frederick Baker became the owner of eighteen bonds for one thousand dollars each, and on the next day brought suit upon the unpaid coupons in the Common Pleas of Philadelphia. After service of the summons upon the company, he obtained judgment by default on the 25th of the same month for 1524.25 and costs. A writ of fieri facias was issued on the 27th, and returned, demand made, etc., by the sheriff, on same day.. A few days later an exemplified copy of the judgment and subsequent proceedings was filed in Lehigh county, and fieri facias issued thereon by virtue of which the sheriff levied, and on July 18th sold to Kilgore the franchises, rights of way, and property bound by the mortgage, for six hundred dollars. About four weeks later the defendant company was organized and became the holder of the title which Kilgore acquired by the sheriff’s sale, and now claims to be legally invested with the franchises originally granted to the Penn. & N. E. R. Co. The position of the defendant is, that the judgment on which the sale to Kilgore was made was obtained for interest upon bonds which were part of the mortgage debt, and that a .sale upon such a judgment divested the lien of the mortgage, and vested an unincumbered title to all the property sold, in the sheriff’s vendee, under the act of April 7, 1870. The learned judge of the coiirt below adopted this view of the case, and applied the rule in Pierce v. Potter, 7 W. 475 to the sale by the sheriff of Lehigh county, under which the defendant claims. This ruling is the error assigned.
In Pierce v. Potter a bond and mortgage had been taken in the usual form by a creditor. When a default in payment occurred, the creditor, instead of proceeding by scire facias on his mortgage, caused judgment to be entered on the bond and proceeded to levy and sell the land bound by the mortgage by process issued upon the judgment so entered. It was struck down to the plaintiff, the mortgagee, for less than the amount due on the mortgage. The mortgagor notified the plaintiff to enter satisfaction on the mortgage, which he declined to do, *319and suit was brought by the mortgagor for such refusal. It was held in that case that while the sale of the land for less than was due might not extinguish the debt, it did extinguish the lien of the mortgage, and the purchaser took all the title the defendant had in the land, free from all incumbrances suffered by him. This rule has been followed in later cases, and is well settled. ■’
If this case comes fairly under its operation, the judgment of the court below must be affirmed. But there is room to distinguish broadly between a mortgage of land in the common form, and a mortgage of the franchises and rights of way of a railroad company, like the one now before us. In the former, the bond and mortgage are payable to the creditor, both are under seal, both pass only by assignment, both are taken as constituting together one security, and the creditor may on default made by his debtor resort to either an action on the bond or a scire facias on the mortgage. In either case, the debtor has actual notice of the proceeding in all its stages, and in either case the land covered by the mortgage must be sold as land. But in the latter form of mortgage the conveyance is not to the creditor, actual or prospective, but to a trustee, who takes title to the franchises etc. for those who may become holders of the bonds secured thereby. Until default is made in the payment of the bonds, or the interest falling due upon them, the trustee has no active duties to perform but is simply the repository of the title to the property mortgaged, in trust for the whole creditor class secured thereby. The actual possession of the franchises and other property remains in the railroad company, to enable it to discharge its duties to the public and earn an income from which to pay its liabilities. But when a default occurs, the duties of the trustee become active and important. He represents all the bondholders, and is under obligation to protect them so far as the property in his hands in trust for them will enable him to do so. If he neglects or refuses to move, any bondholder may proceed by bill filed on behalf of himself and the other members of the class of creditors to which he belongs, to compel a sale of the mortgaged premises, a removal of the trustee, or such other relief as may be appropriate. The bonds are not payable to the mortgagee, but to the bearer; they are not specialties but negotiable instruments, passing from hand to hand *320by delivery or indorsement; they find a market in all parts of the civilized world, and are held as an investment in moneyed institutions and by private persons. The mortgagee has no right to the custody of one of the bonds unless he buys it like any other investor, and they furnish him no choice of remedies. He is shut up to the remedies provided by the mortgage and those which the- courts of equity may afford him for the purpose of bringing the mortgaged property to sale.
There is also an equally broad distinction between the nature of the property mortgaged by a private person and that mortgaged by a corporation. In the first case, the mortgage is of land as such, which is subject to lien in the county in which it lies and must be sold there, and whether sold upon levari facias on the mortgage or a venditioni exponas upon a judgment entered on the bond, it is wholly immaterial to the debtor and to everybody. The same notice personally or by publication must be given in either case, and the result as to the mortgaged premises is an extinguishment of the lien of the mortgage, no matter which method is adopted. But the corporation under the authority of an act of assembly mortgages its franchises, the gift of the state, its corporate powers and corporate property. These are not land, and the mortgage is a lien upon them only because the making of such a mortgage is expressly authorized by law. By the terms of the mortgage this personal property is conveyed to the mortgagee in trust for sale and conversion into money in a particular manner, and he is charged to apply the proceeds to the payment of bondholders pro rata. He takes the title in trust, and his title cannot be divested except by his own act or the decree of a court of competent jurisdiction. The bonded debt is a unit so far as his duties and powers are concerned. He must regard the bondholders as a class and not as individuals. He cannot permit, and if so wanting in fidelity to his trust as to be willing, the courts will not permit the least discrimination between members of the same creditor class. This is the fair effect of the statutory provisions relating to this subject. Section eight of the act of April 4, 1868, P. L. 62, provides that “ The president and directors of any railroad company .... shall have power to borrow money not exceeding the amount of the capital stock subscribed, and issue the bonds of the company therefor .... to be payable at such *321time not exceeding fifty years after the date thereof, and at such place and rate of interest not exceeding seven per cent, as said directors may deem best, and may secure the payment of said bonds and interest by a mortgage on said road and franchises.” So the act of March 18, 1873, P. L. 45, declares that it shall be lawful for airy railroad corporation “ to secure the payment of any and all bonds ” issued by it by a mortgage upon the whole or any part of the “ property, rights, and franchises ” of said company. The mortgage to the trustees is the basis of the loan, and the bonds in the hands of the holder are the evidence of the extent of his interest or share in it.
It has been held to be a presumption of law that all the bonds were issued at the same time which were secured by the same mortgage, and that the fact that they were numbered consecutively gave no priority to any and interfered in no manner with the equality of their holders on distribution. That distribution must be made pro rata is well settled: Perry’s Appeal, 22 Pa. 43 ; Sheaff’s Appeal, 55 Pa. 403 ; Pennock v. Coe, 64 U. S. 117. That the remedy of the bondholders against the property conveyed to the trustee is through him only, is fairly to be inferred from the cases. In New Jersey a bill for foreclosure of the mortgage may be brought by the trustee or by the bondholders against the trustee : Hanckensack Water Co. v. De Keney, 36 N. J. Eq. 548; and Don v. Memphis and Little Rock R. Co., 20 Fed. Rep. 260, holds the same rule, and it is in harmony with the general doctrine relating to the rights and duties of trustees and eestuis que trust. As to other property of the company not conveyed to the trustee, the bondholder may treat himself as an individual creditor, and may proceed to recover judgment for the amount of unpaid coupons or bonds, and to enforce the collection thereof against the defendant : Carr v. Le Fevre, 27 Pa. 413; Phila. and Balt. Central Railroad Co. v. Johnson, 54 Pa. 127. But his execution must be levied on property actually owned by the company and not upon that which has been conveyed to trustees by mortgage or deed of trust duly executed and recorded. He stands when suing at law and proceeding against the railroad company, on the same plane as any other creditor. His writ of fieri facias will reach the same property and in the same way. When, however, it becomes necessary for him to reach the property *322held by the trustee, he must proceed against him, not for his own separate benefit but as a bondholder, and on behalf of the bondholders as a class. What may be realized by such proceeding belongs to the whole class and must be distributed among its members pro rata. This is recognized, though not distinctly asserted, in Bradley v. The Chester Valley Railroad Co., 36 Pa. 141, and in Mendenhall v. The Westchester and Phila. R. Co., reported as a note to the case last cited. The case of The Phila., Wil. and Balt. R. Co. v. Woelpper, 64 Pa. 366, is however, an authority substantially in point. Woelpper held bonds amomiting to $7,200 secured by a mortgage upon the franchises, liberties, property, etc., “ now held or hereafter to be acquired by The Phila. and Balt. Central Railroad Co.” The Phila., Wil. and Balt. Railroad Co. held bonds secured by the same mortgage for $122,942.11, and, a default having been made, recovered judgment for the said sum, and levied upon the engines and rolling stock of the company. Woelpper filed his bill against the plaintiff in the writ and the sheriff, asking among other forms of relief, “ that it be declared that the property levied upon as aforesaid is a part of the mortgaged premises, and is exempt from levy and sale under the execution on the judgment hereinbefore mentioned, or under any other execution that may hereafter be issued thereon.” The master recommended a decree in accordance with the foregoing prayer. The Court of Common Pleas of Chester county made the decree as recommended. The case was brought into this court by appeal and the decree was affirmed and appeal dismissed.
We have been referred to the case of the Chicago and Vincennes Railroad Co. v. Fosdick, 106 U. S. 47, as holding a contrary doctrine; but an examination of that case does not sustain the position of the defendant in error. The sale of the mortgaged property was made by the trustee and the questions were of distribution. We cannot see that the points ruled in that ease are adverse to, but. regard them rather as in harmony with the conclusions we have reached in this. Our attention has been called also to the act of April 7, 1870, as sustaining the position of the defendant in error, and as vesting-in the sheriff’s vendee a title to the mortgaged property clear from the incumbrance of the mortgage. We do not so under*323stand the provisions of that act. It gives a new remedy to creditors who prior to its passage could reach the franchises of a corporation only by process of sequestration under the act of 1836. In lieu of seizure and sequestration, it authorizes seizure and sale of the rights and franchises of the debtor corporation, and declares that the purchaser shall take the same “clear from all incumbrances except any mortgage or mortgages that may legally exist at the time of levy thereupon, the lien of which shall not be affected in any manner by said sale.” If the title to the property and franchises is in the corporation when the seizure is made, the sale passes the defendant’s title free from incumbrances, and the holders of liens must look to the fund. But if the title has been pledged or conveyed to trustees before the seizure, the defendant has only an equity of redemption in the property mortgaged or conveyed, and upon process against the corporation, no greater interest can be seized and sold than the defendant has in the thing seized. The process is not against the trustee. The trustee’s title is therefore unaffected. In recognition of this principle, the proviso expressly saves the mortgage or mortgages that may legally exist at the time of levy.
We, therefore, conclude as follows :
1. The sheriff’s sale to Kilgore passed only such title as the corporation had at the time of the levy in the items of property seized upon the fieri facias.
2. The title held by the trustee, for the purposes expressed in the mortgage, to the rights, franchises and other property covered by the mortgage, is not affected in any manner by said sale.
3. The sheriff’s vendee, Kilgore, and the defendants in this case, have no title whatever to the corporate rights and franchises held by the Penn, and N. E. R. Co., and by that company conveyed to the trustee named in the mortgage, by virtue of the sheriff’s sale set up in their answer.
4. Judgment should have been entered in favor of the commonwealth on the demurrer.