The bill in this case was filed by Plunt & Bro. against the Memphis Gaslight Company and a large number of other persons, in order to realize upon a judgment obtained by the complainants against the Gas Company for $1,754. After *138judgment had been obtained, execution issued, and, having been returned nulla 'bona, this bill was filed in order to have two mortgages executed by the Gaslight Company securing bonds aggregating $400,-000, declared null and void, and to subject the mortgaged property to the satisfaction of complainant’s debt. Relief was also sought upon other grounds hereinafter considered.
It appears that the Memphis Gaslight Company was incorporated November 20, 1851, by a special act of the Legislature, which act gave the company certain powers and privileges contained in the act of November 21, 1849, incorporating the Nashville Gaslight Company. Neither of these acts contained express power enabling the company to execute a mortgage or trust deed.
On April 1, 1875, the Memphis Gaslight Company executed a mortgage by which it conveyed all of its franchises, rights, lots, grounds, factory, machinery, etc., to a trustee for the purpose of securing its bonds to the amount of $240,000, due at thirty years, and bearing seven per cent, interest. On July 8, 1892, it again executed a mortgage, or trust deed, by which all of its property was conveyed to certain designated trustees for the purpose of securing its bonds to the amount of $240,000, which was to be a first mortgage, or prior lien on the property of the company. These bonds were to be used for the purpose of taking up the $240,-000 of bonds secured under the first conveyance *139mentioned. At the same time, the property of the company was conveyed, by way of second mortgage, to secure bonds of the company to the amount of $160,000, which bonds were to be sold and the proceeds used or applied in taking up the floating indebtedness of the company. These are the mortgages which the complainants claim are void for want of authority and power in the company to execute. No question is made as to the due execution of the mortgages, nor is it controverted that the debts secured or intended to be provided for by the issuance of 'the bonds, were valid and subsisting obligations against the gas company.
It is insisted by the complainants that corporations to which are given large powers and valuable privileges, from the exercise of which it is expected the public will derive .advantagé, are impliedly restrained in their power of alienation, railroad companies falling in this class; and it is insisted that gas companies are quasi public corporations, and are governed by the same rules, and, in the absence of legislative authority, cannot execute a valid mortgage. Many authorities are cited by counsel for complainants, and much reliance is placed upon the case of The Portland Gas Company v. The State, etc., an opinion by the Supreme Court of Indiana, reported in 8 Am. Railroad & Corp. Reps., p. 640, and the note thereto. All of these authorities have been carefully considered, and none of them support the contention of counsel for complainants to the extent claimed. They *140mainly discuss the question whether or not gas companies, water companies, and the like, are quasi public corporations, and some of the cases so hold. Some of them place the holding upon the ground that the right of eminent domain had been conferred upon the corporation, which is not the case with1 regard to the Memphis Gaslight Company; and others, again, place the decision upon the ground of pn exclusive privilege given „ the company to occupy the streets, alleys, lanes, etc., of a city, thus practically giving it, in such case, a monopoly of supplying the city with gas.
In the case of the Memphis Gayoso Gas Company v. Williamson, 9 Heis., 314, it was held by this Court, in 1872, that it was not the intention of the Legislature, in the Act incorporating the Memphis Gaslight Company, to confer the exclusive right to manufacture gas in that city. It thus appears that there are material differences between the case at bar and those relied upon by the complainants. None of the authorities, however, hold that a gas company is without power to execute a mortgage.
It was said by the Supreme Court of the United States, at an early day, that: ‘£ It is well settled that a corporation .without special authority may dispose of the lands, goods and chattels, or any interest in the same, as it deems expedient, and, in the course of their legitimate business, may make a bond, mortgage bond, note or draft, and, also, may make composition with creditors, or an assignment for their benefit, *141with preferences, except when restrained by law.” Canal Company v. Vallett, 21 How., 424. This language is quoted with approval by this Court in Adams v. The Railroad Co., 2 Cold., 645, 660.
As was said in a subsequent case in respect to Adams v. Railroad Co.: “The simple question presented was, ‘ had the Mayor and Aldermen of the city of Memphis the power, under their charter, to mortgage their real property or estate for corporation purposes ? ’ ” And the court decided it had. McKinney v. Hotel Co., 12 Heis., 104-20. A municipal corporation is confessedly a public corporation, and if the power to mortgage is enjoyed by a municipality, it is difficult to perceive upon what principle of public policy this power should be denied a gas company, even though it is a quasi public " corporation.
In 2 Cook on Stock, Stockholders & Private Corporations, §179, at page 1261, it is said: “A corporation, other than railroad corporations, may mortgage its real estate and personal property for the purpose of securing its bonds, or other evidence of debt, unless there is some provision in its charter expressly prohibiting or regulating this right. The right to mortgage is the natural result of the right to incur a debt.” Numerous cases are cited in the note. And, further on, discussing the same subject, under the title 1 ‘ Gas Companies, ’ ’ the same author says: “A gas company may give a mortgage on its plant.” Section 927, p. 1262. Mr.' Beach lays down *142the doctrine broadly that all corporations, unless restrained by their charters, have implied power to mortgage, the only exception being that of railroads. 2 Beach on Corporations, §§ 388, 389, 738, et seq. To the same effect see Jones on Mortgages, § 124; Morawetz on Corporations, § 346; Detroit v. Mutual Gas Co., 43 Mich., 594; Hays v. Galion Gas Co., 29 Ohio St., 330.
Though the authorities in other States agree in holding that a railroad corporation, owing to the peculiar relation which it bears to the public, should be denied the right to execute a mortgage unless it has express legislative authority therefor, yet, as a matter of fact, this power is always conferred; and, indeed, it is doubtful whether a railroad could be successfully operated without the power to mortgage. Thus the practical results of business have demonstrated the unsoundness of the reasoning .upon which the principle was established that it was against public policy to confer upon railroad corporations the power to execute a mortgage. Our conclusion is that the Memphis Gaslight Company was authorized to execute the mortgage in question. This conclusion renders it unnecessary to consider the effect of the Act of 1885, conferring upon certain corporations the power to execute mortgages or trust-deeds.
It is next insisted that, as the debt due complainants was for the purchase money of coal and coke used by the gas company in the manufacture of gas, that this constitutes a preferred claim, superior, even, *143to the rights of the holders of the mortgage bonds. In order to sustain this position, much reliance is placed upon the case of Fosdick v. Schall, 99 U. S., 235; Burnam v. Bowen, 11 U. S., 776, and similar cases. All of the cases cited by counsel for the complainants are actions against railroads; and in these cases the principle is laid down that, when a Court of Chancery appoints a receiver of railroad property, it may impose .such terms in inference to the payment from the income during the receivership of outstanding debts for labor, supplies, equipments, or permanent improvement of the mortgaged property, as may, under the circumstances of the particular case, appear to bo reasonable; and that it is within the power of the Court to use the income of the receivership to discharge obligations for labor, supplies, and the like, which, but for the diversion of the funds, would have been paid in the ordinary course of business.
Chief Justice Waite, in the course of the opinion in the first cited case, says: ‘‘The mortgagee has his strict rights, which he may enforce in the ordinary way. If he seeks no favors, he need grant none; but if he calls xipon a Court of Chancery to put forth its extraordinary power and grant him purely equitable relief, he may, with propriety, be required to submit to the operation of the rule which always applies in such cases, and do equity in order to get equity. The appointment of a receiver is not a matter of strict right. Such an application calls for the *144exercise of judicial discretion, and the Chancellor should so mold' his order that, while favoring one, injustice is not done to another.” Fosdick v. Schall, supra. In a later case, where this doctrine was invoked in respect to a proceeding against a waterworks company, Mr. Justice Lamar, delivering the opinion of the Court, said : ‘£ The doctrine of Fosdick v. Schall has never yet been applied in any case except that of a railroad. The case lays great emphasis on the consideration that a railroad is a peculiar property of a public nature and discharging a great public work. There is a broad distinction between such a case and that of a purely private concern. We do not undertake to decide the question here, but only point it out.” Wood v. Guarantee Trust Co., 128 U. S., 416.
Again, the doctrine invoked by the ‘complainants only applies where there is a diversion of the income of a “ going concern ’ ’ from the purposes to which the income is equitably and primarily devoted— viz., the payment of the operating expenses of the concern. Ib.
The record in this case fails to disclose that the current income of the gas company was in any way diverted, or not used in paying the current expenses of the company. We are of opinion that there is no error in the decree of the Chancellor denying a prior lien in favor of the complainants upon the property of the gas company.
It is next insisted by the complainants that, by *145the terms of the resolutions adopted by the stockholders, under which the issue of the $160,000 of bonds was authorized, it was contemplated that these bonds were to be sold for cash, and the proceeds used to liquidate the floating debt of the .company, and that the board of directors, in breach of its duty, pledged these bonds to secure debts due to some of the directors, and to secure others as accommodation indorsers.
There is no doubt but that it was contemplated by the stockholders, and the directors as well, that these bonds should be sold; but the evidence shows that the directors used all reasonable endeavors to accomplish this end, but failed.
The resolution recites that the floating indebtedness of the company then amounted to $135,134.80, the validity of which is in no part impeached by complainants. The resolution also recites that, in making necessary improvements, additions, and extensions, it would be necessary to expend $25,000 in addition to the above; hence, the issue of, the $160,000 second mortgage bonds was authorized. Of the $135,134.80, only about $11,000 was due to directors, the balance being due to the banks, and third persons who were clamerous for payment. Many propositions looking to a placing of these bonds among the stockholders were- made and discussed, and attempts were also made in an endeavor to effect a consolidation with the Equitable Gaslight Company, the rival in business of the Memphis Gas*146light Company, through the American Debenture Company, of New York; but the debenture company failed in business, and all efforts to extricate the Memphis Gaslight Company through these means proved abortive.
In order to quiet creditors, the bonds, from time to time, were pledged to secure the various creditors holding the floating indebtedness above ' mentioned. Complainants insist that this pledge was a misapplication of the bonds, ndtra vires, and void, but the reverse has been decided in this State, and we adhere to that opinion. Baxter v. Washburn, 8 Lea, 1-15. See, also, Dunscombe v. Railroad, 84 N. Y., 190. The various debts for which these bonds were pledged matured from time to time, and, the banks declining to extend time of payment, the collateral bonds were sold and bought, in by the varioiis creditors; and, upon demand made, default having been made in the payment of the interest coupons on the bonds, at the request of the holders of the second mortgage bonds, the entire plant of the Memphis Gaslight Company was sold by the trustee, subject to the first mortgage bonds and back taxes, estimated at from $10,000 to $20,000, and also subject to the claims of certain material men, then in suit, aggregating about $8,000.
The property was purchased by T. K. Riddick, C. W. Schulte, and C. F. M. Niles, representing the holders of the second mortgage bonds, for $125,000, *147and the purchasers were in possession when the bill in this case was filed.
Directors of a corporation are not express trustees. At most, they are implied trustees, and are not expected to, give their whole time and attention to the business of the company, but, by assuming the office, they do agree to give as much of their time and attention to the duties assumed as the proper care of the interest intrusted to them may require. Walluce v. Bank, 89 Tenn., 630. The utmost good faith must at all times be exercised by directors.
After a careful survey of all the evidence, we fail to find that the directors were guilty of any bad faith whatever, and it also appears that they were not wanting in care and attention to the best interests of all concerned. In fact, the evidence discloses that, in view of the character of the business of the company, the condition of its business, and all other relevant facts, the directors are not chargeable either with bad faith or inattention or negligence in respect to the performance of their duties.
One other question remains to be disposed of. After the banks and holders of the floating indebtedness had closed out their collaterals and became owners of the second mortgage bonds, and after the trustee had advertised the plant of the Memphis Gaslight Company for sale, negotiations were set on foot by representatives of the Equitable Gaslight Company looking to a purchase of these second mortgage bonds, with a view of purchasing, or effecting *148a consolidation with the Memphis Gaslight Company; and, to that end, the following proposition was addressed to J. T. Frost and his associates, who were the owners of the second mortgage bonds:
“March 2, 1894.
“J. T. Front and annooiaten, Memphis, Term.:
“Dear Sirs — We agree and bind ourselves you and your associates to bid for and purchase the property of the Memphis Gaslight Company, as described in the advertisement of the Manhattan Savings Bank & Trust Company, etc., and to give therefor the sum of $135,000, out of which, all taxes upon said property are to be paid. Said price to be paid for the same at any sale under which a satisfactory title can be acquired. As soon as we have title and possession of said property, we will procure and transfer to you and your associates who accept the terms of this offer, within ten days from date of. possession, fully paid up stock in the Equitable Gas Company, of Memphis, Tenn., equal at par value to seventy-five per cent, of the amount invested or advanced by you and your associates on the second mortgage bonds of said Memphis Gaslight Company, it being understood that the capital stock of the Memphis Gaslight Company does not now, or will not after said seventy-five per cent, is issued, exceed the total sum of $1,000,000.
“We will employ attorneys, at our own expense, to examine and conduct necessary proceedings to ob*149•tain satisfactory title to the aforesaid title of property, you and your associates agreeing to hind yourselves to act according to the suggestions of our .attorneys in the premises.
“It is further agreed and understood, that whilst we are not hound to bid any sum over and above ■$135,000, we are at liberty to bid a further sum at any sale that may take place of said property; but, no matter what sum may be bid by us in excess of the $135,000 for said property, it is in no way to change the stipulation herein contained in regard to the amount of Equitable Gaslight stock to be furnished you and your associates.
“ (Signed) Wm. Katzenberger,
£ c ISADORE KATZENBERGER. ’ ’
It is insisted on behalf of the complainants, that all the holders of the second mortgage bonds bore a fiduciary relation toward the creditors and stockholders of the Memphis Gaslight Company, and that the above proposition should have been accepted by them. Conceding, for the sake of argument, the existence of the fiduciary relation, we are not prepared to admit the soundness of this contention. Deducting the taxes admitted to be due upon the property, and not considering -the claims in suit by material men, the $125,000 realized at the sale subsequently had equaled in amount the $135,000 in cash offered in this proposition. The offer ' within ten days from the date of possession to deliver fully paid *150np stock in the Equitable Gas Company, equal at the par value to seventy-five per cent, of the amount invested or advanced by the second mortgage bondholders, was regarded by Frost and his associates as an improper proposal, or, at least, one which would lay them open to grave suspicion on the part of the stockholders. The propriety of accepting such a proposition may be well doubted, but, passing that by, it will be noted that the $135,000 was to be paid only at a sale under which a satisfactory title could be acquired. Tt has been held that, in case of a chancery sale, the Court has no power to give a bidder assurance of a good title, and that a proffer to bid upon such assurance cannot be entertained. Irby v. Irby, 11 Lea, 165.
Conceding that Frost and his associates bore a fiduciary relation to the creditors and stockholders, we know of no law which imposed upon them the duty of guaranteeing to anyone a perfect title under the sale as advertised. And the proposition is especially objectionable when we see the additional condition imposed was, that the Messrs. Katzenbergers were to employ attorneys, at their own expense, ‘‘ to examine and conduct necessary proceedings to obtain satisfactory title to the aforesaid title of the property, you and your associates agreeing to bind yourselves to act according to the suggestions of our attorneys in the premises.”
When it is remembered that this was long the rival in business of the Memphis Gaslight Company, *151and that the Equitable Company had obtained a contract with the city of Memphis to light the streets, and had entered into a bond obligating itself, as one of the conditions of obtaining the contract, that it -would not enter into any contract or combination or consolidation with the Memphis Gaslight Company, it would have been exceedingly injudicious, to say the least of it, to have accepted such a proposition. The property was then under advertisement, and the Equitable Gas Company, or anyone else, was at liberty to purchase upon equal footing with the holders of the second mortgage bonds. As was observed by the Court in the last cited case: ‘‘The only test of the value of property at a forced sale is what it will bring.” lb.
There is no proof whatever in the record that the sum bid by the purchasers at this sale was inadequate. We are of opinion, upon a review of the whole case, that the decree of the Chancellor was correct, and it will be affirmed with costs.