Fidelity Ins., T. & S. D. Co. v. West. Penn. & S. C. R.

Opinion, Mu. Justice Green : It is scarcely necessary to add anything to the clear and satisfactory opinion of the learned court below. We agree entirely with the conclusions reached and affirm the decree without hesitation. In no point of view can the appellant claim the benefit of the resolution of January 21, 1843, P. L. 367. The deed of trust given by the corporation for $400,000, was executed on July 12, 1882 and recorded on July 18th of the same year. The construction contract with the appellant was not executed until August 15,1882. Of course it had no legal efficacy until it was executed. The proposition of July 7th was only a proposition. It was not acted upon until after that time and never became a contract until August loth. But, independently of this, the appellant has not brought himself within either the words or the meaning of the resolution of 1843. He did no work until after the date of the contract, and of course not until after the mortgage or deed of trust was recorded. Now the resolution by its very terms only protects debts or liabilities which have been incurred and remain unpaid prior to the execution of the “assignment, conveyance, mortgage or other transfer ” in question. That this is the true meaning of the resolution has been repeatedly decided: M’Broom’s App., 44 Pa. 92; Fox v. Seal, 22 Wall. 424, adopted by this court in Tyrone and Clearfield Railway Company v. Jones, 79 Pa. 60. Hence it follows that the appellant, all of whose work was done after the execution and recording of the deed of trust, and to whom no debt or liability of the company was due or remained unpaid prior to that time, can take no advantage of the resolution. His claim that he has an equitable lien which [578] gives him priority to the bondholders is altogether untenable. It is founded upon the allegation that as he did the work of construction, which gave value to the property of the company and tended to secure the bondholders, he has an equity in the nature of a lien sufficient to give him priority in the distribution. It is enough to say there is no such lien recognized at law or in equity. No authority is shown for the proposition, and we apprehend there is none. It is suggested in one of the assignments of error that the mortgage or deed of trust is void under the act of March 13, 1873, which prohibits the issuing of bonds in excess of the capital stock actually paid in. It is only necessary to say that no such question is raised by the pleadings in this case, and hence it is not before us. Moreover.it would not be practicable for the appellant to raise this question, because if any fraud or violation of the law was practiced in this respect he was himself a party to it. He received the whole capital stock ostensibly as part payment of the contract price of construction, but presumably for another purpose, because he immediately transferred it to others, and he therefore knew that the capital stock had not been paid in money. As a participant in the fraud he could not now be permitted to avail himself of his own wrong for his own benefit. The master has found that only twelve thousand dollars had been paid on the capital stock when the deed of trust was made. It was a clear and highly reprehensible violation of the law to execute a mortgage or deed of trust in such circumstances, and to put upon an innocent public a large amount of bonds whose validity might be very questionable, to say the least; but, as no question arising out of that consideration is raised upon this record, its discussion and decision are immaterial. Decree affirmed, and appeal dismissed at the costs of the appellant.