delivered the opinion of the court. After stating the case, he proceeded as follows. The court are of opinion, that the 380 shaies of stock were deposited in the hands of the defendants below as a pledge to secure the payment ol the loan made to the plaintiff’, with interest, and that the defendants had no right to appropriate the pledge, or any part thereof, without the consent and by the direction of the plaintiff, to any use or purpose; and that the plaintiff' had no power of disposition of the shares until the loan, with interest, was satisfied, without the concurrence of the defendants, because thereby the security would have been diminished. That the defendants had no money in their hands, belonging to the plaintiff, to pay the instalment, and were under no obligation to advance money for him, and thereby increase the debt due to the bank from him. And if the defendants considered the shares so pledged as amply sufficient to secure the debt, it was not compatible with their duty as trustees, for the stockholders to divert the funds of the bank from their ordinary and legal appropriation, to pay the instalment due from the plaintiff) and thereby free him from the penalty he would nave incurred by not complying with the call, which the interest of the bank had rendered necessary. And such conduct in the defendants would have made that provision of the law nugatory as to the plaintiff, which was intended to secure punctuality in the payment of instalments, and the interest of the other stockholders would have been diminished, by such improper interference, to the amount of the dividends on the said stock, which became a part of the common funds of the bank, and the defendants would have been justly chargeable with partiality in such application of the funds.
If the sufficiency of the pledge had been doubtful, prudence and sound discretion would have dictated the pro; *344priety of the payment by the bank to render the debt secure.
The court are of opinion, that the plaintiff, by his refusal or neglect to pay the instalment of go on each share qf stock'thus pledged, forfeited his claim to the two dividends declared by the defendants, and that he had no right to sustain the action in this case.
The court do not consider that the objections raised to the declaration are sustainable.
Johnson, J-having stated the facts, thus proceeded— Whether or not the court below erred in the opinion given by them, is now for the consideration of this court
The action for money had and received will be sustained if the plaintiff has an equitable right to the money; and the case must rest and depend on the same principles that would govern the decision if the cause was now before a court of equity.
Before I proceed to the examination of those principles ' that ought, in my opinion, to govern the cause, let us take a view of the relative situation of the parties.
The bank, aware of the call it had made on the stockholders for payments, receive the stock in question. Over it the bank acquired tbé legal interest, backed with an equitable right to the extent of the debt due. The money paid on that stock, even without (he additional responsibility of the plaintiff, as the endorser of the notes, together with that of the drawer, was an ample, and more than ample security for the debt. The sum paid on the stock was >nly $300 less than the debt itself, and the stock itself, as it then stood, worth more than the sum due. The dividends on the stock in its then situation, would have exceeded the interest on the debí more than $130 — the one limited to six, and the other never dividing less than eight per centum.
When those parties were thus situated, was it equitable or just for the bank to receive the stock, with an intention to demand g1900 more to be paid thereon, and in case of failure to claim all the profits such stock would otherwise have drawn? Is it consistent with equity or justice, and in a court of chancery could such a demand be set up under any pretext or denomination whatever? I cannot for a moment believe that in that court, whose power it is to relieve from, and not enforce foifdtvres, that such a question would bear a moment’s consideration.
The object of the clause in the act of incorporation, on which the plaintiff’s demand is resisted, most unquestionably was to draw more money into the bank to meet its engagements, or to further its operations; and no one could question its right to detain, from'the delinquent stockholders, the dividends, and either keep them in the vaults of the bank, or divide them immediately amongst the punctual stockholders, as they conceived most advantageous for the institution, when there was no other connexion than that of a mere nuked stockholder. But it will not follow *345that the same consequences are to result when the connex-ion of the bank with the stock is more intimate. If the bank had obtained the equitable as well as legal right to the stock in question, then, as to the bank, and as to all ■who were interested in the institution, this stock would have drawn the same interest, whether the instalments called for were paid or not; for as the bank, as such, has no funds, and only uses those of the stockholders, if money had been paid on those shares, it must have been the money of the stockholders remaining in the bank — -a surplus fund undivided; and, therefore, when the dividends were struck, the stockholders would receive the same sum, either as their interest in the stock thus increased, and less out of the surplus fund, or more out of that fund, and less on account of the stock. A payment, therefore, on stock owned by the bank, could add nothing to its funds — it would bring no money into the bank. The simple operation would be to give a different destination to that which was already there.
But it is urged that here the bank had not an absolute interest in this stock; certainly such is the fact; for if it had an absolute indefeasible interest, then this suit never could have been conceived, as the plaintiff would have had no part or lot in the matter. But the bank had the legal, and to a large extent, the equitable interest also; and yet We are told, and l may say only told, that the bank, the mortgagee of this stock, was not bound to do those acts, if any were to be done, to keep the stock (if I may so express myself,) in full existence, and not suffer it, as to the interest of the mortgagor, to be completely prostrated. Now let it for a moment, for argument sake, be admitted, that the bank was not bound to make the payments; yet it cannot be controverted by any one the least conversant with the principles by which a court of chancery is governed, that if ex gratia, the payments had been made, the dividends in question must have been accounted for to the mortgagor, either by applying them to sink the debt, or by a payment over, that being discharged. But we have already seen that such a payment could not have added to or diminished in the slightest degree the interest of the institution. By the act of incorporation the stock is to be transferred on the books — those books, and those aloné, will then disclose the stockholders. At the time when the money in question was called to be paid, the bank, by its president, was the holder. Now let it be yielded, that the officers of the bank would have received the payment if the plaintiff had offered the money, yet, if received, it must have been received as if paid by the president, and added to the increase of the stock. The name, or the agency of the plaintiff, could not have appeared in the transaction. If then the payment must appear (if it had been made,) to have been made by the president of the bank, is it, on principles of equity and justice, certain that he *346was bound to have caused such entries to be made as would have kept the stock in full power?
It has already been established to my comprehension, that an actual payment of money out of the surplus funds, or an entry made on the books, purporting that the payment was made, could not have affected the interest of those concerned in the institution. It remains to be considered, whether, if the one or the other was necessary to keep the stock in active operation, the defendants were not bound so to have done? And if they were, then it must be conceded, they have no right to retain the money in consequence of their own neglect or fault.
The able counsel who conducts this case on the part of the bank, as is usual with him, when he cannot bring books to support the principles he contends for, concedes those brought to bear against him, but draws out of his own fertile imagination nice distinctions, just suited to cover his case.
It is unquestionably established that a mortgagee in possession, is bound to do those acts, to keep the premises fit for a beneficial use; and that if he makes no profits, from neglecting to do so, he must account as if he had. 5 Bac. Ab. tit. Mortgage, (F) 104. It is also clear that he is bound to perform all covenants running with the thing mortgaged; that he is bound to do all acts that are necessary to prevent the mortgaged premises from being forfeited. Pow. on Mort. 264, 266.
But it is said those principles have no bearing on the case. To my mind each and every of them sanctions the plaintiff’s right to recover the money in question.
If the mortgagee is compelled to repair, to keep the mortgaged property fit for use, which can only be done by incurring expense,' a fortiori, (if it be necessary,) were the defendants bound to make the payment, or entries: for neither the one nor the other could in the slightest degree have diminished the interest or dividends of the stockholders. If the mortgagee is bound to comply with the covenants running with the mortgaged premises, then, as the demand in question was bottomed on the covenant that the stock should cease to divide in case the demand was not met, which runs with the stock, the mortgagee was bound to have met it, to have avoided such forfeiture.
But it is contended that the demand was not founded on •a covenant connected with the stock itself, but that the sums called for were part of the original purchase money. The reverse is the case; for if the demand was founded on a debt due from the plaintiff at the time he became a stockholder, then, it would follow, that the noncompliance with the call, would subject him to a suit for the money; and yet,- it is apprehended, that none who question the decision of the court below, will go to.the extent that he might have been sued for the money. This remark answers also the argument on the part of the appellants, that a subsequent mortgagee is not bound, before he can resort to the *347Mortgagee] premises, to discharge the prior mortgage, supposing such an argument to have the least applicability to the case before the court. But it seems to roe to have no bearing; for, in no instance could the subsequent niortga-gee resort to the property until such prior mortgage was discharged, or unless it was adequate to both, and then no contest could exist.
That the claim for a forfeiture on the noncompliance with the call, is evidently founded on a covenant running with the stock, appears from its resting on the terms of the law under which the stock is taken — each party agreeing to those terms. If such a clause had not been inserted in the law, then no demand could have been made, producing such an effect. The principle, that the mortgagee in possession is bound to do all acts to prevent a forfeiture, powerfully bears on the present case; for, if the mortgagee of leasehold property is bound to pay the rent to avoid a forfeiture to a stranger, which requires the advance of money on his part, how much more strong is the case here a-gainsi the mortgagee, where no money need have been advanced, and when he himself claims such forfeiture?
But it is urged that the case before the court is not to be governed by those principles that apply to mortgagees in possession. For it is said, if the mere act of executing a mortgage makes a mortgagee in possession, then all mortgagees are mortgagees in possession. But as a distinction exists between them, therefore the merely executing a mortgage can have no such effect. No person can suppose the mortgage itself constitutes a mortgagee in possession. But the case before the court never could have existed if the bank had not been in possession, possessing such property as the property in question, in the way, and only way, it could be possessed — receiving all the profits immediately as they became due.
But it has been observed, that the stock was not transferred to the bank, but to II. Waters, ami that supposing if it had been transferred to the bank, on the facts in the cause, the dividends could not have been withheld; yet that circumstance varies the case. It does not appear to me in any manner to alter the question; for as he was the president and agent of the bank, it must be affected by his conduct, and I know of no other way of transferring to the bank, except through the instrumentality of the president thereof.
Against the plaintiff’s demand it is also urged that the defendants are not liable, because the dividends in question have been distributed amongst the stockholders. This ground is as defenceless, in my opinion, as those already considered. If tenable in this case, it must in all cases prevent any money from being received, no matter bow unjust!) it was detained, provided they have paid it away. By the.charter the bank is to be sued in the name of the president and directors — the stockholders are not liable to be sued as gush for the conduct of the bank, and they cam *348only be. come at through the president and directors. If by the injustice of the president and directors, or by the misconception of the rights of the stockholders, they pay away to one or more, more money than he or they were entitled to receive, the president and directors are liable to the person injured, whose money was thus unjustly paid away, whether the same proceeded from the purest or most unworthy motivesjand their remedy is against the stockholders- — a remedy in their own hands; for if compelled to pay, as in this case, there will remain, to the extent of the recovery, less to be distributed.
JUDGMENT REVERSED.