The facts above stated appear from the pleadings and papers on file, and for the purpose of the motion will be considered as true. I will first consider some of the positions argued by counsel against the proceedings appointing the receiver, and for which it is urged the motion should be sustained.
First, it is urged that complainants have not shown by their bill that their mortgage was recorded, and that without which it is insisted it is void. In reply to this objection it is insisted that, as between mortgagor and mortgagee, the recording of the mortgage is unnecessary. Such I understand to be the law of this state, but the mortgage was not necessary to the validity of the bonds; it is only a means to secure payment. The bill alleges that the bonds were issued under legislative authority, and, if so, and no other objection is shown against their validity, they constitute a debt against the corporation that issued them; and the mortgage security given was valid between the parties to it without registration.
Secondly, it is insisted that the order appointing the receiver was irregular, if not void, as against the prior mortgagees, unless they had been made parties, or it had contained a provision that their rights should not be affected by the appointment. Quite a number of authorities have been read and commented upon by the learned and experienced counsel on both sides upon this as well as all other points raised, but, when considered together, in my judgment establish the rule that when a prior mortgagee fails to take possession of the mortgaged property, a junior encumbrancer whose rights are likely to be injured by the property remaining in the possession of the mortgagor, may file his bill, and, if sufficient cause is shown, may have the property placed in the hands of a receiver without making prior encumbrancers parties; and whether the order appointing' receiver contain the provision that it is without prejudice to the prior encumbrancers or not, it is without such prejudice. But when the receiver takes possession under his appointment he holds as the officer of the court, and, being in the possession of the court, it cannot be taken out of the possession of its officer only by order of the court, whose duty it is to protect and enforce all the rights of parties to the property then or afterward appearing, or who may be brought before it. I am satisfied that this objection to the order appointing receiver is not maintainable.
The record and papers now before the court show that a portion of the first mortgage bonds, with interest, are now due, and that payment has been demanded and default made for more than 60 days, and that the trustees have been requested to take possession of the mortgaged property under the powers contained in the mortgage, and that they are willing to take possession and execute the trust. The ease, as at present presented, shows that there is a large amount of indebtedness due upon the first and second mortgage bonds, for which the property now in the hands of the receiver, covered by these mortgages, is liable, before the complainants can enforce their security or demands; and that this property and its income should and must be applied first to the debts secured by the first mortgage, then to those secured by the second mortgage, then to those secured by the mortgage under which complainants claim, and the residue, if any, to the mortgagors. As at present presented, the only question is as to how this property can best be used and applied so as best to secure and enforce these rights. The property is the property of the mortgagors, subject only to the encumbrances in their order of priority. The mortgagees are only securities. The power conferred upon the trustees to take possession, operate, and sell, if necessary, is a mode provided by contract for the execution of *1209the trust without the aid of the court; and were the trustees under either of these prior mortgagees to take possession of the property, and undertake to execute the trusts, in a manner prejudicial to the subsequent in-cumbrancers, a court of equity, upon application, would restrain such improper execution, either upon its restraining orders upon the trustees, or take it out of their possession, and place it in the hánds of a receiver. In other words, it is a duty of a court of equity, when properly applied to, to see that trust property is so managed and disposed of as to secure and protect the rights of all parties having an interest therein, according to their priority. This court, as I believe, has properly possessed itself of the property for the benefit of those who may show themselves entitled to it, and will, as far as its judgment will permit, see that it is used, •controlled, and disposed of so as to secure the rights of all parties in it. It is insisted upon the part of the trustees that they have the legal title to this property, and that this court, as a court of equity, has no right to hold it from their possession. It is true that they have a legal title, but this is only for the purpose of executing a trust, which, if the circumstances require, this court, as a court of equity, has the power to execute; and the court, having possession of the trust property, cannot be called upon to surrender it, unless it is shown that the trustees can better execute the trust in justice to all parties than the court, through its orders and decrees, executed by its officers. This, to my mind, has not been fully shown, and I might, without saying more, for this reason overrule the motion now insisted upon. But as the questions in this cause have been very fully and ably presented by the distinguished counsel on both sides, and as the case is one of unusual importance, not only to the parties immediately concerned, but to the public, whose means have been contributed to the building of this great thoroughfare, and from which no return has been or ever will be made, except the incidental advantages enjoyed, I hoped to be pardoned to consider in anticipation some of the questions involved.
The property now under control of the receiver extends from New Orleans to the Tennessee line. The property covered by these first and second mortgages embraces only the railroad and its appurtenances from Canton to the Tennessee line, and the rolling stock, etc., wherever it may be. That for the purpose of executing these trusts this property should be separated from the balance of the property now in the hands of the receiver, and managed and controlled by a receiver or other agent, subject to the orders and control of one court, if it can be done, I think must be apparent to any disinterested mind understanding the present complications surrounding the cases. At present some 40 miles of the railroad is subject to the orders and decrees of the circuit court for the Southern district of this state, and must remain so until released by the order of that court, or one of its judges, upon proper proceedings at chambers. As the process of this court extends to that district, 1 submit whether it will not be best to take such steps as will give to the one court or the other the control, so far at least as the present management is concerned. No long delay need take place. Those making this motion have obtained leave to file a cross-bill, which I presume will be done in a short time; and upon that proceeding, and within a short time, any needed steps may be taken to place the road and property covered by the first and second mortgages under the separate control of the one court or the other, under the trustees as receivers, if they shall be deemed best qualified, or under some other competent person or persons, so as fully to secure the rights of all. Or, if the complainants prefer, they may pay off or otherwise secure the debts secured by the first and second mortgage, and let the property remain under the control of the present receiver as now managed by-him.
In stating my views on the questions presented I have not referred to and commented upon the numerous authorities read and commented upon by counsel, but have considered the rule thereon stated, and applied them to the facts to this case according to my best judgment. Nor have I considered the question as to whether the motion is properly made to obtain the relief sought by the motion, as I am of the opinion that there is not sufficient cause shown for placing the property in the possession of the trustees, otherwise than as receivers under any form of proceeding. I am. however, satisfied that the cross bill prepared to be filed is the more appropriate mode.