dissenting.
Convinced that the majority opinion discloses a serious misapprehension of the evidence herein, particularly the documentary part of it, and believing that the reasoning-based thereon is in consequence so erroneous as to make the decision not only wrong but, in its inevitable effect, unjust, I respectfully dissent. Regretting the necessity of so doing, I proceed to give the story and its meaning as I see- it.
The case involves conflicting claims to securities in the hands of the Colorado National Bank of Denver arising in part at least out of a trust agreement which was entered into on December 15, 1924-, by and between that bank and the Equitable Bond & Mortgage- Company, a Colorado corporation. The company is now in the hands of a receiver. The latter and the trustee bank are the defendants in error. The relevant portions of the trust agreement (the italics are mine) follow:
“Whereas, said Company * * * is issuing and selling its first mortgage bonds secured by deeds of trust or first mortgages on improved real estate * * * and providing therein that to secure the same the Company will hold in escrow with the Trust Department of said Bank the notes, deeds of trust and mortgages necessary to secure the same; and
“Whereas, said Bank has consented to hold in trust the said notes, etc. * * * for the benefit of the holders of said bonds issued and to be issued by said Company, as hereinafter set forth;
*33“Now * * * this indenture witnesseth * * *
“1. That the Company has issued and will * * * execute and issue its ‘Savings Bond’ in the forms hereto annexed * * * and also its coupon bonds in the forms hereto annexed * * *
“2. The Company agrees as security for all bonds delivered to it under this agreement with said Bank’s certificate thereto affixed, to * * * deliver to the Bank, in accordance with the terms of this agreement, deeds of trust or mortgages and the notes secured thereby' * * * aggregating * * * not less than 110% of the face of all coupon bonds delivered- to it by the Bank and also 110% of the loan or cash surrender value of the savings bonds, or in lieu thereof 110% of said values in cash. * * *
“3. The Company hereby * * * delivers to said Bank * * * notes, mortgages and deeds of trust * * * described in the schedules hereto annexed * * * in order to secure and provide for the payment * * * of the bonds aforesaid to be issued and delivered in accordance herewith. Said transfer is made by the Company in trust for the equal pro rata benefit- and security of all persons * * * who may have or become the * * * holders of any of the aforesaid bonds, irrespective of the order of issue, without m%y preference or priority of any one bond over another. * * * it being the meaning and intention of the parties that all of the mortgages and deeds of trust and notes thereby secured which shall be deposited and held by the Bank at any time, and any cash so deposited, shall be held in trust for the equal pro rata benefit and security of all bonds which shall be delivered duly certified by the Bank to the Company for said notes, mortgages, deeds of trust and cash. * * *
“5. * * * once each month the Company shall furnish the Bank with an itemized statement of its existing liability on all bonds. * * *”
The plaintiffs in error are interveners who base their claims upon the purchase of certain of the company’s savings bonds. I shall first consider the nature of the *34contract of the company with these individual bondholders. The practice of the company was to issue, in lieu of the savings- bond purchased by the intervener, what was termed an interim certificate. The terms and conditions in the latter substantially duplicated those in the bond. By one provision, similar in both, the company expressly promised that “to secure this savings bond the company will hold in escro¡w with the trust department of the Colorado National Bank of Denver, Colorado, notes secured by deeds of trust or first mortgages on improved real estate-; bonds or cash in an amount equal to 110% of the liability or cash surrender value hereof.” We have thus, in addition to the usual promise of a bond to pay a certain sum of money, a promise to secure the bond by the deposit of a specified class of securities.
The original purposes of the trust agreement are clear. Thereunder each bond was to be sold by the company only after the latter had presented it in completed form to the trustee bank, and after the bank had certified it and delivered it back to the company; whereupon, and not before, the bond would be ready for purchase from the company by the prospective bondholder. The authors of these provisions manifestly aimed to effectuate the contract for deposited securities, as stated in the bond and the interim certificate. Thereby each bondholder would hold a certified bond, secured pro rata.
In each savings bond and in each interim certificate appears a registration clause. The one in the interim certificate reads: “After twelve monthly payments have been made hereon, this bond %oill be registered by the trustee without charge.” On the face of the interim certificate in the record herein appears the additional clause: “After twelve monthly payments have been made said bond will be registered with the Colorado National Bank and delivered to the within named bond purchaser.” When the forms of bonds and interim certificates were prepared, and also- when the trust agreement was signed, the intent undoubtedly was to give equal pro*35tection to all who had the company’s aforesaid promise of security. It was not then contemplated that the bondholders should ever have a higher or lower rank, and a greater or lesser security, according as they might win or lose in a race or scramble to get their respective bonds “registered.” Such inequality Was not thought of. The “registration” referred to in the various documents was plainly a different thing from the “certificate,” though counsel for the defendants in error maintains that they were intended to be — and are — the same. Nothing in the trust agreement lends support to such a contention. The reasonable and natural meaning of the language decisively refutes it. If any proof were needed that no check was intended or expected to be made by the bank on the company, or on the company’s securities deposited with the bank, paragraph’ (e) in subdivision 12 of the trust agreement would be conclusive. It states that “the trustee assumes no responsibility” for the validity of the bonds issued or of the trust agreement, or for the nature-, extent or amount of the securities on deposit, nor for the truth or falsity of recitals of fact in the bonds or the trust agreement, or of any statement of value or appraisal authorized or required of the company, or any of many other matters. Indeed, the only responsibility assumed by the bank is for the custody and handling of the securities and, in case there is a liquidation of those securities, of the proceeds thereof.
There would have been, as already stated, perfect equality of bondholders in accordance with the original intent if the procedure contrived in the trust agreement had been applied. Instead of applying it, however, the company and the bank discarded that procedure altogether in so far as it governed the selling of certified bonds. The bonds were sold direct by the company without the bank’s certificate. The bank saw none of them except (according- to the testimony of the bank’s trust officer, who had the matter in charg-e) as some were brought to it by the company after they had been issued *36and sold. In such instances the blank certificate on the bond was possibly filled out and signed by the bank; if so, it was done not in compliance toith the trust agreement, however, but gratuitously and without the slightest authority from it for certifying’ after the bond had been sold or issued; in many instances, if not all, long’ after the interveners had paid value in good faith. Not a single bondholder holds a bond certified before sale as the trust agreement required. Not one therefore has a right to obtain a preference through reliance upon some technical or merely formal advantage; it cannot be done without violating the fundamental principles of equity. To award such a preference is t;o make a new contract for the parties.
It is to be noted that neither the saving’s bond nor the interim certificate declares or intimates that either " registration” or "certification” is obligatory in order to •entitle the holder to enjoy his security. No information was conveyed by either of the two instruments as to what effect, if any, "registration” or, for that matter, "certification” would have. There was no hint that either "registration” or "certification” might have the slightest connection with the question of time, method or assurance of payment. For all we know from the record, the "registration” or even the "certification” might merely establish the prima facie genuineness of the bond or the prima facie title to it.
The majority opinion seems to argue that the securities cannot be participated in by bonds not "registered” or "certified” because no securities were deposited except to cover the bonds that did receive "registration” or "certification”; and that the latter act was the only means the bank possessed of keeping* the bonds within the limit of securities deposited by the company. It has been shown that the bank acknowledged no such duty. Nor was such duty imposed upon it. It voluntarily ignored the provision requiring it to affix its certificate to bonds before they were sold. If that certificate had been *37affixed under the trust agreement, before sale, the bank could not possibly get information thereby. On the contrary, it evidently relied for its information upon subdivision “5” of the trust agreement, quoted in the beginning. We must assume that the company did actually furnish to the bank each month the required “itemized statement of its existing liability on all bonds.” The bank had no duty to see that the bonds sold did not exceed the total of securities deposited. By paragraph (e) in subdivision 12 of the “trust agreement” it had expressly guarded against that.
Since none of the bondholders has obtained a valid preference in any way prescribed or recognized by the express terms of the trust agreement, the securities constitute a trust fund which ought to be administered by this court.
The foregoing discussion can lead to but one conclusion: that full effect ought to be given to the original intent, that of giving all the bondholders the same right to a pro rata share of the securities deposited with the bank. “Equality is equity.” 1 Pomeroy, Equity Jurisprudence (3d Ed.), section 406. In the present case the application of this time-honored maxim of chancery coincides with the actual contract rights of the parties. And, in aid of those contract rights, this court ought not to hesitate in applying that other salutary maxim which enables it even now to enforce them equitably under the circumstances of the case before us: “Equity regards that as done which ought to be done.” Id., §§364 et seq. The judgment should, in my opinion, be reversed and the case remanded for further proceedings by which a pro rata distribution might be effected among all the bondholders according* to the promise made to them by the company.
Mr. Chief Justice Adams and Mr. Justice Hilliard concur in this opinion.