This bill is brought by the plaintiffs, holding a majority in amount of the bonds secured by the mortgage of the Western Yermont Railway, executed to Knapp and Briggs, as trustees for the holders of the bonds, praying a decree, that Knapp and Briggs, after the foreclosure of the mortgage, held no estate in the premises conveyed, except a mere nominal, naked, or dry trust, for the sole benefit of the cestuis que trust. In other words, that the trust did not impose any functions or duties whatever, except to convey the estate to the cestuis que trust; that it was a naked use of the character, which the statute of Henry VIHth would have executed, without the formality of a convey* *52anee: and as a consequence thereof, that the contract of lease, made by Knapp and Briggs to the Troy and Boston Railway Company, may be declared void, and an account taken of the profits made by the railway company, a receiver appointed, and the sum found due decreed to the plaintiffs and their associates.
I. The first, and the great inquiry in the case is in regard to the natute of the estate in the trustees, created by the mortgage, the forfeiture, and the foreclosure.
It is obvious that the estate must depend very much upon the implications growing out of the relations of the parties, and the duties consequent thereon ; and that these may change, from time to time, as circumstances change. That which begins as an active, responsible, and fiduciary trust, may, by lapse of time, and intervening relations, become merely a naked, dry trust, and vice versa. The nature and character of all trusts depend, almost exclusively, upon the implications growing out of the state of the property, the purposes desired to be accomplished, and the mode provided for that end. And it is one of the most important, and, at the same time, one of the most delicate and difficult offices of a court of equity, to raise these implications, with wisdom and justice, so that the full purpose and object of the trust shall be effected, without violence, or forced construction of the instrument under which the trusts are created.
All contracts are, more or less, subject to implications, constructive additions, and implied limitations. These are the powers,-by which courts, in matters of contract, are enabled to make a brief memorandum, which does not express one-tenth part of what is intended, speak truly, and fully, the mind of the parties. These limitations and implications must indeed be conceived in the spirit of liberal, wise, and farsighted circumspection, or they will be liable to become a terror to all just sense of uprightness and fair dealing. Herein consists the power and the wisdom of courts of justice in the administration of civil jurisprudence, in making shreds and fragments, and even finess and indirection sometimes, subserve the ends of fair dealing and justice. It is to be expected that some cynical sneers will sometimes be heard with reference to these implications and constructive additions, *53both as to contracts and statutes, either in more or less of the spirit of seriousness and complaint, or of badinage and pleasantry, or both perhaps. But still the process must go on, so long as human imperfection and cultivated society, with its manifold and complicated relations, continue the same they now are. It is not impossible that every case, which occurs in a court of justice, may give occasion for the exercise of something of this function of judicial construction.
But upon no subject is there so much demand for the exercise of construction, and of judicial implications, as in regard to trusts, and especially trusts of this complicated and public character. And these implications and constructive additions are not the less a part of the contract than its most express provisions.
There are extensive trusts connected with the whole subject of corporate action, which come under the class of what in the books are denominated constructive or implied trusts. In one sense the corporation itself is a mere trustee, holding all its funds, and all its powers and franchises, in trust for the shareholders, who are the ultimate cestuis que trust. So too, the directors of a corporation are mere trustees, holding their office, and performing their functions strictly as trustees fpr the benefit, ultimately, of the shareholders, and directly, and primarily of all having claims against the company.
The persons to whom these mortgage bonds are payable have not only the express trusts to perform, which are created by the terms of the deed under which they are made trustees, but they are also constructively trustees, (after the forfeiture, and taking possession of the road, which they may always do after condition broken,) for subsequent incumbrancers, for the corporation, and ultimately for the shareholders themselves.
But it is not with these classes of constructive or implied trusts, that we are cheifly at present concerned. It is with the express trusts, created by the terms of the deed, when construed and expounded by the attending circumstances and the reasonable implications and necessary limitations, that we have to do at present.
We can not of course go much into detail here upon so extensive a subject as that of the construction of powers, and execu*54tory or active trusts. The books are filled with cases of this class, involving interests of the greatest magnitude, and where the terms of the deeds or instruments, by which the trusts were attempted to be created, were deficient in all specific definition of the purposes expected to be accomplished, and especially in regard to the mode of its accomplishment. In all these cases the courts of equity have not scrupled to carry out the apparent purpose of the contract in the mode most consonant with the terms used, as interpreted by the known and obvious rules of construction. We shall not stop to discuss”a class of cases, so numerous, and all tending to the same result, the accomplishment of the apparent and obvious purposes of the contract. We proceed at once to the consideration of the nature of the trust created in the case before us.
And it will scarcely require distinct enunciation here, that in entering upon a subject so new, so difficult, and where the consequences of mistake are likely to be of such importauce to the State and its citizens, we have attempted to proceed with reasonable caution and circumspection; and at the same time fairly to meet the emergency, without shrinking from its weight or responsibility, deeming it of the last moment, that upon such a subject we start, if possible, in the right direction, and with a just comprehension of the interests at stake. ■
We think it could scarcely escape the notice of any one, who had seriously and patiently attempted to master this question, that until the actual foreclosure of the mortgage the trusts involved in the contract and imposed upon the trustees named are entirely fiduciary and executory. At first, and so long as prompt payment is made, it is understood, in practice indeed, that the office of such trustees is rather silent, and the duties of the trustees, by means of the negotiability of the bonds and of the coupons attached, are ordinarily performed, or expected to be performed, by the corporation or its officers. If the interest in the coupons, and the principal, as it falls due, are promptly paid by the corporation, so that no forfeiture occurs, it will never become of sufficient importance to consider the question, what is the precise nature of the .trust created by the contract in the first instance.
• But after the forfeiture occurs either by non-payment of inter*55est or principal, or both, as in the present case, the duties of the trustees become, not only active and responsible but critical and delicate. It not only is not a dead, dry trust, but is one of the most active and momentous responsibility. We presume no man who had ever been placed in such position, and who had any proper sense of his position, would ever think of regarding or treating it as in any sense a trust of a nominal or indifferent character. It is not a dry trust at this point certainly, or if so, it is not in the sense of the books ; if so in any setise, it is 'not so in regard to its duties or responsibilities.
The trustees must then elect between delay and action ; between, on the one hand, taking possession of the road and its fixtures, and thereby assuming at once the vast public and private burdens and responsibilities of a great public work, forming, perhaps, a necessary link in some great thoroughfare; and on the other, delay, and consequent further embarrassment, complication and loss; or they must undertake the ulterior and final remedy of foreclosure. And those persons, if any such there be, who could regard the discharge of such a trust, to be exercised in the face of such alternatives, as any formal or nominal affair, have certainly yet much to learn in regard to the nature of this business. For at this point it will not be assumed that the trustees could have surrendered the trust to to the cestuis que irust, or that they were in any condition to obtain counsel from them. It was the sole, or the first purpose of their office, that they should act, and should exercise their wisdom and discretion upon the possible ' occurrence of this very emergency. They were selected doubtless with reference to their capacity and responsibility for this very contingency, both by the corporation and the cestuis que trust, and neither of these parties had stipulated to deal directly with the other, but only with the trustees, as the responsible party. This duty they must meet and perform. This they did do.
The next inquiry is whether their functions ceased upon the foreclosure? When we look at the position of affairs at this time, it seems difficult to come to any such conclusion. The powers and duties of the corporation, in regard to the road and its franchises, under such a mortgage and foreclosure, must be regarded as effectually terminated’ for all practical purposes. *56The trustees and the cestuis'que trust, one or both, had effectually become the corporation, or had acquired all its essential rights, and assumed all its duties, so far as the public was concerned. And these were important and pressing. Delay for the shortest interval might be attended with disastrous consequences to the continuance of the franchise even, and must be so, in every view, to the interests of the cestuis que trust. The road could not, in strict propriety, be allowed to stop for a single day; and it could not be allowed to cease operation for any considerable time, with any safety to the interests of those to be affected by the depreciation of the property, and the intervention of counter interests and influences.
The cestuis que trust, the holders of these bonds, were a changing unorganized body, having no common bond of union, and no recognized principle of action, unless by unanimity of consent, which is practically impossible. It would not be expected, under such circumstances, that there should be an immediate surrender of the property to this heterogeneous and chaotic mass of men, women (single or married), and infants, many of whom were under such disabilities that they could not act for themselves, and where consequent delay must ensue in providing the means of obtaining their consent in a legal form, which must be fatal to the enterprise. All this must be regarded as in the contemplation, of the parties at the time of entering into the contract, by which the bonds were issued. It must be so regarded in looking for the true construction of the contract, for in that we are attempting to obtain the mind and will of the parties at the time of making the contract in regard to the state of facts which has now intervened ; and it will, perhaps, fairly test this, to ask ourselves, what would have' been their probable response, had the inquiry then been put to the parties; What shall be done with this property, and how shall it be managed, in case of foreclosure ? Shall the trustees continue to manage it for the time being, and until the order of the court or chancery, as in the case of other trusts ? It seems to us there can be but one response to this question. The trustees seem to have been selected for this very offlee, among others, of controlling and managing the property in case of forfeiture and surrender, as trustees, for the benefit of the cestuis que *57trust, in order to make it available for the payment of the bonds, both interest and principal. This must be so, until some organization of the bondholders, and the acquiring of some capacity to act, by a majority, or in some such way, as to enable them to discharge this new class of duties thrown upon them by the forfeiture of the condition of the mortgage, and the surrender of the* road with its incidents and fixtures.
After the surrender and before foreclosure, as we have before intimated, while the control of the road for the benefit of the bondholders might fairly be presumed to be temporary, it could not with the least show of propriety be expected that any change in the principle of their mode of action should be attempted. Any one who accepted the office’ of trustee under a contract of this character, must be supposed to look directly at the reasonable probability of the occurrence of this contingency, the failure to pay promptly, and to have assumed his position with reference to the new duties resulting from the occurrence of such contingency, and would consequently be bound to perform the duties arising from it. And all the other parties in interest, the bondholders, the creditors of the corporation, in the order of their priority, the corporation itself, and ultimately the shareholders will have a vested interest in having these duties performed by such trustees under the security of their responsibility and capacity, both pecuniary and personal. And we do not well perceive how they can be relieved from this responsibility, except by the decree of the court of chancery, who alone' have the legitimate control over such matters.
And it is well settled, in the court of chancery, that trustees are not to be removed, or discharged, from part of their trust, leaving them burthened with and responsible for the remainder. Goodson v. ElUason, 8 Russ. 594. Nor will such a trust be discharged until fully performed, or the cestuis que trust are in a condition to manage it themselves. Nor will trustees be changed except for sufficient cause, affecting the faithfulness and capacity of the trustee, or the interest of the cestuis que trust, or perhaps on account of the public interest, which is extensively concerned in trusts of this character. These are but elementary principles in the law of trusts, familiar to every one the least conversant *58with the subject, and will be found distinctly laid down in the elementary treatises upon the subject.
And a trustee, once having assumed the office, is morally and legally bound to continue in the performance of its' duties, until discharged by the order of the court of chancery, or the unamimous consent of the cestuis que trust, which in a case of this kind, where there are of necessity always more or less of infants, married women and others under disabilities, incapacitating them to act personally, or in any way effectually, except through the guardianship of the court of chancery, is morally impossible, and practically so except through the agency of a court of equity.
So that before the actual foreclosure of the mortgage, there can be no question whatever, that the trustees are the only responsible party in regard to the management of the property.
And after the foreclosure, it seems to us, that although the contingent interests are mostly cut off, and the number and character of the ultimate cestuis que trust very much changed (reduced in number, and simplified, in regard to their interests), the duties of the trustees and the necessity of their continuing to act, remain much the same.
The necessity of immediate and efficient action is precisely the same, and so is the difficulty or impossibility of accomplishing it •through the cestuis que trust; and the utter' ruin to the interests at stake in consequence of any considerable delay is none the less imminent. There would therefore seem to be a duty remaining in the trustees to manage the property for the benefit of the cestuis que trust. And this duty is to be estimated by the surrounding circumstances, and what a prudent owner would esteem reasonable under these circumstances. We do not say they are to' perform this duty permanently, but they must do it until they •can be legally exonerated.
' II. And this duty must be performed in a manner to meet all the incidents of the case; taking into account the nature of the property, the public demands upon those who operate the road, and the duty of securing the greatest permanent return to the cestuis que trust. And not only the nature of the property, but the extent of the equipment included in the mortgage, and which comes to the trustees, must be considered.
*59We have then, in the present case:
1. An entire road of more than fifty miles in length with no adequate equipment whatever. And if the equipment were perfect, it is questionable how far the trustees are bound to assume the burden or responsibility of personally operating the road, farther than results necessarily from the fact that the legal title is in them, and that the public have no other party to look to in the first instance. But as they had no equipment in this case, it would not be expected they should attempt to purchase one. Under such circumstances we might expect prudent managers to look, either to a lease to some party owning a road in connection, and having sufficient rolling stock to operate both roads ; or to some other party, having rolling stock, the use of which could be secured at a reasonable rate. Both of these modes were practicable in the present case. But it would seem that the one Avhich the trustees elected was preferable, as imposing less risk and promising more return, especially after the short experiment, made by the trustees, of attempting to operate the road, by means of agents, with hired rolling stock, which produced a loss of some thousands of dollars in a few days.
2. This road was part of an important thoroughfare in the State, affecting transportation and travel to a large extent, thereby making it the duty of the public authorities to insist upon the strict and faithful performance of its public functions and duties. There were also rival lines of transportation and travel, whereby it became important to the interests of the cestuis que trust, that the operation of the road should not be suspended for even the shortest period of time ; as such suspension would destroy confidence in its permanent efficiency, and produce a diversion of traffic, which could not fail to be seriously injurious to the interests of the cestuis que trust.
3. It was a species of property which could only be made remunerative by placing large interests, and long lines of communication, as far as practicable, under unity of control and management.
4. They could not consult the entire body of cestuis que trust, and their duty being due to the body severally they were not- at liberty to follow the advice or wishes of the majority, as they *60were still liable to the minority for faithful administration. And in showing this, the advice -of the majority would be no more conclusive, in then favor than that of others, equally skilled and equally interested in the question. Having assumed the duty of faithful administration of the trust in behalf of the several owners of the bonds, they were not at liberty to shield themselves by anything short of showing the fact of such administration, or that they were excused by the owners’ unanimous consent from the performance of their duty under the trust.
5. They must act without delay, and under the responsibility of being made liable for a breach of trust, if they failed to act in time, or to act with proper discretion, wisdom and forecast.
6. It was a trust of a character so entirely new, that very little light could be gained from any analogy to other trusts. Even the right of the trustee of real estate, held for the support and benefit of the cestuis que trust, where the right to lease for twenty-one years, or even for a much longer term, is unquestionable, could afford no satisfactory guide in a case like the present. There is a very essential difference between land and buildings, even where comparatively small repairs are required, to maintain them in tenantable condition ; and a railway, where heavy expenditures are requisite from day to day. So that the powers and duties of trustees, in regard to lands and buildings and other real estate of that kind, are not in any just sense a guide for trustees of the character now under consideratian.
Under all these circumstances the question presents itself, as it occurred to the mind of the trustees, at the moment of the foreclosure. They would naturally try, as they did, the temporary expedient of operating the road on their own account, if the thing were practicable, as the test of this mode of administering the trust. This we think proved so disastrous, that the trustees ought not longer to have continued it, if any mode presented itself, whereby they could exempt themselves from loss, and especially if gain could be secured. The leasing the property to some connecting road was obviously the most hopeful expedient, practicable.
And it seems to us that the rent secured in the present case is quite as good as could reasonably have been expected. The *61wonder is that the Troy and Boston Company could afford to pay so high a rent. The other conditions of the contract are not objected to, with the exception of two.
1. The provision in regard to repairs and renewals. This, it seems to us, must be regarded as sufficient. We are to understand this provision, as we do all the provisions of this, and of all contracts, with reference to the general purposes and objects of the contract, and what it is reasonable and natural to expect under it. We are not to suppose that the lessees will cease operating the road during the whole, or any considerable portion of the term, and then pay the rent, and perform the covenant in regard to repairs. The very supposition is little short of absurdity. It could not be done short of renewing the entire perishable portion of the superstructure of the road. The covenant is, that the lessees shall “return said road and property, both real and personal, at the termination of this lease, in as' good condition and repair in all respects as it now is in, natural wear only excepted.”
This covenant, construed with reference to the subject matter of the contract and its other stipulations, imports that the road is to be kept in good running condition during the term, and returned in that condition. And all structures which by decay, or accident, become unsafe for use, must be renewed at the expense of the lessees. This, every one conversant with the subject must understand is a very onerous covenant, and one which secures to the lessors all that could be asked, or desired.
2. The length of the term is objected to. But with the condition for defeasance, which this lease contains, enabling the parties in interest, a majority in amount of the bondholders, to terminate it in one year by notice to that effect, we can not regard the length of the term, ten years, as being unreasonable. It is well known that a favorable lease for a much shorter term could not reasonably have been expected to be offered by any connecting road. It requires a considerable time to bring these extensive works into such a train of operation as to be made remunerative. Experienced directors would not venture upon a term which, if it went beyond a few months, did not extend over a considerable number of years. And as this is a case *62where there is no reasonable probability that the bondholders would attempt to operate the road themselves, without an essential modification of their principle of action, through some definite organization, which certainly could not speedily be effected, as the law then stood, it would seem that the contract secured to them all that was desirable in regard to the shortness of the term. A longer term would in fact, no doubt, have been far better than a shorter one for the interest of the cestuis que trust.
Taking the contract all in all, and the circumstances of the property, there has never been any question, in our minds, that the contract must be regarded as a provident one, a very desirable one for the cestuis que trust. And if it were less so, we know of no principle of chancery law, by which it could be set aside in a court of equity, upon any such grounds, short of making a case, where the lessors had exceeded their powers, in assuming to enter into the" contract.
It seems to be now well settled in the English courts, that railway contracts, and, indeed, all contracts by corporations, are not to be held invalid for any omission in the detail of preliminary proceedings, or in the provisions of the contract, unless the contract itself was ultra vires. In such case where the lessor has not the power to enter into the contract of lease, and the extent of such power is open equally to the knowledge of both parties, the lessee is bound to know the fact, and it is regarded as virtually bad faith to accept a contract where the other contracting party acted in a fiduciary relation, and which he had no power to execute. And it is upon this ground that the plaintiff proceeds, both in the bill and the argument, and we regard it as the only ground upon which the plaintiff’s case can be supported.
The proposition of the want of power in the lessees to accept such a lease, which has been so much labored in argument, does not seem to us available on the part of the orators. The defendants, and their creditors, and shareholders, have and do acquiesce in the contract. It is one which, by the express provisions of our statute, it is competent for those having the control of Vermont railways to make with, railways out of the State, connecting at the line of the State with such roads. And as it is a vexed question among those learned in the laws of New *63York, how far the statutes of that State have authorized the defendants, the Troy and Boston Railroad Company, to accept such contract, we think it is not competent for the plaintiffs to claim any advantage on this ground, until the State of New York,, or those interested in the Troy and Boston Railway interfere. This principle has been repeatedly recognized in this State by this court; Noyes v. Rut. and Bur. Railway Co., 27 Vt. 110; Rut. and Bur. Railway Co. v. Proctor, 29 Vt. 93.
In regard to the validity of the mortgage nothing need be said. Both parties claim under it, and, consequently, are not in a position to raise that question; and if they were, it would not seem there could be much question in regard to it.
The view we have taken of the case renders it unnecessary to examine the other points raised in argument.. Neither are we called upon at this time to give any intimation in regard to the action of the majority in amount of the bondholders, and whether it had the effect to terminate the lease. This bill was brought before the first year terminated, and does not of cóurse base itself upon such ground. We could therefore only decide the case upon the grounds made in the bill, and other pleadings.
It will be perceived that the lease in this case was made before any statute existed in this State enabling the bondholders to organize themselves into a corporation, which will apply of course to contracts made after the law came in force ; and we do not intend to intimate any opinion here how it might have affected the present case had it existed at the time of the foreclosure. The lease containing a power of revocation during the first year, by which its operation* was limited to one year, if this power, thus reserved to the bondholders, was not exercised, it was of course by their own acquiesence and consent that the lease was extended beyond one year. And if that power was exercised, the lease was in effect a lease but for one year.
It may be proper to add, that if the contract in this case had contained no condition whereby it could have been terminated by the legal agency of the cestuis que trust, in some short but reasonable period, at the beginning of the term of lease, we probably might have regarded the lease as somewhat more questionable, so far as the power of the trustees is concerned. It is certain such *64a clause of revocation was highly prudent and proper, and the lease without this provision would wear a very different aspect, and perhaps merit a different consideration.
A majority of the court think the decree of the chancellor should he reversed, and the case remanded to the court of chancery, with instructions to dismiss the hill with costs, making such other orders in the case as may he required to preserve the interests of all concerned.
Barrett, J., dissented from the opinion of the court. Bennett, J., dissented from so much of it as affirmed the right of the trustees to make a lease for so long a period as ten years, hut concurred on the other points, and in the judgment.