or rescission of the contract; but, on the contrary, that they insisted on its continued existence, and on performance of it according to their understanding of its meaning. After stating that they did not understand that the contract needed the ratification of the company to make it valid, they say: "We understood then, and understand now, that the sale made at that time on behalf of your company was an absolute, and final, unconditional sale. We do not understand, further, that this resolution was forwarded to us with the view of in any way modifying that sale in any of its terms." Certainly this was a fair construction of the resolution. Then, after commenting on the commercial meaning of the word “tons,” which could only be varied by express conditions in the contract, they say: "No such conditions were mentioned in the contract of your company with us, and we look, therefore, for the delivery of the rails within the dates named in the contract of your company, and in 'gross' not 'net' tons." They then add their belief that Murchie, to whom the letter was addressed, understood the contract as Wheeler did as to the number of pounds to the ton. The correspondence ceased here until the time for delivery of the rails arrived. Nothing more was said or done by either party during this time. The last word from each to the other was a clear assertion of the existence of a valid contract, and the very last words of the correspondence was the assertion of Wheeler & Co. that "we look for the delivery of the rails within the dates named in the contract." When, therefore, on the fourteenth of June, the railroad company notified Wheeler & Co. that they were ready to comply with the contract by delivering tons of 2,240 pounds, and requested to know whether it should be made at New York or New Haven, they must have been surprised by the letter of Wheeler & Co. denying the existence of the contract, and treating the matter as a negotiation from which no contract resulted. The contrast between this and their last letter of February 28th is indeed remarkable.

By this letter of June 14th Wheeler & Co. do not place their refusal to receive on the ground now set up by counsel, namely, that though a contract was made, it had been waived or abandoned by the parties, or by the railroad company, or that the company was estopped from enforcing it; but on the broad ground that the negotiations for the sale and purchase of the iron had failed, and had never become a contract because of the disagreement as to the difference between net and gross tons. As there was a contract, as neither party had abandoned it, or expressed any purpose to do so, Wheeler & Co. were bound to accept and pay for the rails when tendered, unless they have some other good reason for not doing so. It is said such reason is to be found in the silence of the railroad company after the receipt of the letter of Wheeler & Co. to Murchie of the twenty-eighth of February, by which the railroad company is estopped from enforcing the contract. It would be difficult to make out such an estoppel from mere silence, since nothing remained to be done by either party until the time for performance came. If the letter of Wheeler & Co. had expressed any doubt of the binding force of the contract, or had made any proposal for its modification, or had suggested a willingness to reconsider the question of weight of the tons, there might be some reason why the railroad company should have responded, and why a failure to respond might be some small evidence of want of good faith. But these letters show a determination on both sides to insist on their rights under the contract, and Wheeler & Co.'s letter left no answer to be made unless the other party should yield its construction of the contract. It was not bound to do this. It had a right to insist on the contract, and to refer its performance of it to the courts in case it became necessary. The railroad company could, when the time for delivery of the rails came, deliver the 1,000 tons by either standard. If the other party accepted there was an end of the matter. If it did not, it could accept pro tanto, and sue for the balance, or it could refuse to accept at all. But in all this the contract would remain, and would be the

measure of the rights of the parties in court or out of it. There was, therefore, no necessity for the railroad company to reply to the letter of Wheeler & Co. It was not bound to say any more than it had said as to the true meaning of the contract. There was no demand in the letter of Wheeler & Co. that the railroad company should accept its construction. There was no intimation that if this was not done the contract was at an end, or would be abandoned. Let us suppose that the price of iron had risen instead of declining during this three or four months, and the railroad company had failed to deliver, would Wheeler & Co. have lost their right of action by anything in their letters, or by the cessation of the correspondence? Clearly not. And yet, if that correspondence released one party, it must have released both. There remained no obligation, unless it was mutual. The right to deliver and require payment, and the right to require delivery, were correlative rights, one of which could not exist without the other. The judgment of the court that plaintiff was entitled to recover is right.

The objection to the amount of the recovery rests upon the contention of defendants that they were only bound by the contract for the October delivery to accept 200 tons, while the court held them bound for the difference in price for 600 tons. We concur with the circuit court in holding that when Wheeler & Co. say we have bought of you (the railroad company) "from two (2) to six hundred tons for delivery in New York or New Haven between August 1st and October 1st" that they agreed to accept any amount of old rails between those limits. The company was selling old rails. It knew that by August it would have a thousand tons. It did not know how much more they would have by October 1st. It intended to secure the sale of what it might have, between 200 and 600 tons. Besides, as it was bound to do the first act in performance of the contract by delivering the iron, the option, if there was one, was with the railroad company. The defendants were never in condition to exercise this option, if one existed. Townsend v. Wells, 3 Day, 327; Patchin v. Swift, 21 Vt. 292; M'Nitt v. Clark, 7 Johns. 465. The judgment of the circuit court is affirmed.

(114 U. S. 598)

BROWN, Adm'r, etc., v. STATE OF MARYLAND and others.

(May 4, 1885.)

CHESAPEAKE AND OHIO CANAL COMPANY-STATUTES MD. 1834, CH. 241; 1835, CH. 395; 1838, CH. 396; AND 1844, CH. 281-LEVY BY CREDITOR-Rights of STATE OF MARY

LAND.

Under the statutes of Maryland of 1834, c. 241; 1835, c. 395; 1838, c. 396; and 1844, c. 281, and the instruments executed pursuant to those statutes,-the tolls and revenues of the Chesapeake & Ohio Canal Company are mortgaged to the state of Maryland, to secure the repayment of money lent by the state to the company, and the payment of dividends and interest on the stock subscribed for by the state; subject, in the first place, to the appropriation of so much of the tolls and revenues as is necessary to keep the canal in repair, to provide the necessary supply of water, and to pay the salaries of officers and annual expenses; and, in the second place, to a mortgage to trustees to secure the payment of certain bonds of the company. And, at the suit in equity of the state and of such trustees, even before the state has taken possession under its mortgages, a general creditor of the company, who, at the time of contracting his debt, had notice of the provisions of the statutes and of the mortgages, will be restrained from levying on money deposited by the company in a bank, and needed to meet such necessary expenses.

Appeal from the Circuit Court of the United States for the District of Maryland.

This was an appeal from a decree in equity of the circuit court of the United States for the district of Maryland, restraining a judgment creditor of the Chesapeake & Ohio Canal Company from levying upon money deposited by

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that company in a bank in Baltimore. The case appeared by the record to be as follows:

The Chesapeake & Ohio Canal Company was incorporated, and constructed a canal from Georgetown, in the District of Columbia, to Cumberland, in the state of Maryland, under statutes of Virginia and Maryland of 1824, confirmed by the act of congress of March 3, 1825, c. 52, (4 St. 101, 793-802.)

Under the statute of Maryland of 1834, c. 241, the state of Maryland lent to the company the sum of $2,000,000, to be used in the construction of the canal; and the company, on April 23, 1825, to secure the repayment of that sum, and interest, made to the state a mortgage of "all and singular the lands and tenements, capital stock, estates and securities, goods and chattels, property and rights, now, or at any time hereafter to be acquired, and the net tolls and revenues of the said company." No part of that loan, or of the interest accrued thereon, was ever paid.

Under the statute of Maryland of 1835, c. 395, the state subscribed and paid for 30,000 shares, and under the statute of 1838, c. 396, 13,750 shares, together constituting a majority of the stock in the company; first receiving from the company, as required by each statute, an instrument in writing under seal, by which the company guarantied to the state the payment, out of the profits of the work, of 6 per cent. yearly on the money paid to it by the state under that statute, until the clear annual profits of the canal should be more than sufficient to discharge the sums which the company should be liable to pay annually to the state, and should be adequate to a dividend of 6 per cent. among its stockholders, and further agreed that thereafter the state should receive, upon the stock by it subscribed for, a proportional dividend upon the profits of the work as declared from time to time. The company never paid to the state any part of such dividends or interest. On May 15, 1839, the company, as required by the statute of 1838, and to secure the payment to the state of interest for three years at the yearly rate of 5 per cent. on stock issued by the state under that statute to the amount of $1,375,000, made another mortgage to the state of its lands and tenements, property and effects, as well as of its net tolls and revenue. No part of this interest was paid.

The statute of Maryland of 1844, c. 281, authorized the company to borrow money and issue its bonds to the amount of $1,700,000, to provide means for completing its canal to Cumberland, and contained the following provisions: Sec. 2. "The bonds so issued as aforesaid, shall appear on the face of the same to be preferred liens on the revenues of said company, according to the provisions of this act, and with the assent of the said company, as is hereinafter provided for; the said bonds, without any preference or priority over each other on account of date, shall be preferred liens on the revenues and tolls that may accrue to the said company from the entire and every part of the canal and its works between Georgetown and Cumberland, which are hereby pledged and appropriated to the payment of the same, and the interest to accrue thereon in the manner hereinafter mentioned: provided, however, that this state shall in no case be bound or held responsible for the payment of said bonds or the interest thereon: and provided, further, that the president and directors of the said company shall, from time to time, and at all times hereafter, have the privilege and authority to use and apply such portion of said revenues and tolls as in their opinion may be necessary to put and keep the said canal in good condition and repair for transportation, provide the requisite supply of water, and pay the salaries of officers and agents, and the current expenses of the said company."

Sec. 4. "That the rights and liens of this state upon the revenues of the Chesapeake & Ohio Canal Company shall be held and considered as waived, deferred, and postponed in favor of the bonds that may be issued under the aforegoing sections, so as to make the said bonds, and the interest to accrue thereon, preferred and absolute liens on said revenues, according to the pro

visions of the second section of this act, until said bonds and interest shall be fully paid."

Sec. 5. "That semi-annually in each year, as the same shall be payable, said Chesapeake & Ohio Canal Company shall pay the interest on the bonds constituting preferred liens as aforesaid to the party or parties respectively entitled thereto, or to their agent or agents authorized to receive the same; and as soon as the net revenues of said company, arising from the canal and its works between Georgetown and Cumberland as aforesaid, shall be more than sufficient to pay the interest that may become due and in arrear upon said bonds, with the costs of remittance and exchange, if there be any, and such further sum, not exceeeing $5,000 annually, as may be necessary to pay the interest on the bonds or certificates of debt heretofore issued by said company to the creditors of the Potomac Company, for claims adjusted under the twelfth section of the charter of the Chesapeake & Ohio Canal Company, the said company shall annually pay to the treasurer of the Western Shore of this state, who shall receive the same under the responsibilities of his office, the surplus net revenues as aforesaid, to such amount as may be necessary as an adequate sinking fund, not exceeding the sum of $25,000 a year, on an average of years, dating from the first day of January next, after the completion of the canal to Cumberland; which sum or sums shall from time to time be invested by said treasurer, and be accumulated by him as a sinking fund to pay the principal of said bonds, until a sufficient amount is so paid and accumulated for that purpose."

Sec. 6. "That the president and directors of the Chesapeake & Ohio Canal Company be, and they are hereby, authorized to execute any deed, mortgage or other instrument of writing, that may hereafter be deemed necessary or ex-6 pedient to give the fullest effect to the aforegoing provisions."

Sec. 7. "That the Chesapeake & Ohio Canal Company shall execute to this state and deliver to the treasurer of the Western Shore of Maryland a further mortgage on the said canal, its lands, tolls and revenues, subject to the liens and pledges by the aforegoing provisions of this act made, created, or authorized, as an additional security for the payment of the loan made by this state to the said company, under the act of December session, eighteen hundred and thirty-four, chapter two hundred and forty-one, and the interest due and in arrear, and which hereafter may accrue thereon; which mortgage shall be submitted to the attorney general of this state, and be approved by him as sufficient in law."

On January 8, 1846, the company, pursuant to section 7 of that statute, and as an additional security for the payment of the $2,000,000 before lent by the state of Maryland to the company, under the statute of 1834, and interest, executed a mortgage of all its lands and tenements, its canal and appurtenances, "embracing the entire undertaking, and the tolls and revenues that may hereafter accrue," and all its property and rights; "subject, nevertheless, to all and singular the liens and pledges by the provisions of the beforementioned act of eighteen hundred and forty-four, chapter two hundred and eighty-one, made, created, or authorized, or that have been or may hereafter be made, created, given, or granted by the said Chesapeake & Ohio Canal Company, or the president and directors thereof, under or in pursuance of the provisions of said act, which said liens and pledges are in nowise to be lessened, impaired, or interfered with by this deed, or by anything herein contained, and subject, also, to all the other provisions of said act."

On June 5, 1848, the company executed a mortgage, reciting the last provision of the second section, as well as the provisions of the fourth and sixth sections, of the act of 1844, and conveying to William W. Corcoran and others, trustees, "the revenues and tolls of the entire and every part of the canal and its works between Georgetown and Cumberland." to secure, after the payment of debts existing or thereafter contracted for repairs on the canal and provid.

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ing the requisite supply of water, and for salaries and current expenses-First, the payment of interest on the bonds issued by the company under the act of 1844; second, the payment of interest to creditors of the Potomac Company; third, the creation of a sinking fund for the redemption of those bonds; with the further provisions "that so long as the said canal company shall comply with their agreement by paying all the interest upon said bonds as the same falls due, and by providing an adequate sinking fund in the manner specified according to the provisions of the said act for the final redemption of the said bonds, they shall retain the management of the canal and its works, and collect and receive the revenues and tolls; but if they fail to comply with these conditions from any cause except a deficiency of revenue arising from a failure of business without fault on the part of said company, said fault to be made to appear by the grantees aforesaid, then the grantees may demand and shall thereupon receive possession, and shall appropriate the said tolls and revenues in the manner herein before provided.'

In 1854, Charles Macalester, a citizen of Pennsylvania, received in an action in the circuit court of the United States for the district of Maryland, upon a debt not secured by any of the aforesaid mortgages, a judgment for $5,471.37, and costs. In 1867, Macalester having died, the appellant took out letters of administration upon his estate in Maryland, and became, as such administrator, plaintiff in that action, and judgment was entered for him against the company, and he in 1880 issued an attachment upon that judgment, and caused it to be laid in the hands of a bank in Baltimore as garnishee upon moneys standing to the credit of the company on the books of the bank. Those moneys were in the possession of the bank on deposit, and were exclusively made up of the tolls and revenues received by the company in the course of its business, and were sufficient to pay the judgment debt, interest, and costs, but were required to meet the necessary expenses of putting and keeping the canal in proper navigable condition, after payment of the salaries of officers, and supplying the necessary quantity of water for purposes of navigation.

In 1882, Macalester's administrator having applied to the court for a judgment of condemnation of so much of the moneys in the hands of the garnishee as would satisfy his judgment debt, interest, and costs, bills in equity to restrain further proceedings by him were filed by the state of Maryland, and by the trustees under the mortgage of 1848, setting forth the facts above stated, and also alleging that Macalester and his administrator "had each notice, before acquiring any of their respective rights of action in the premises, of all the liens, charges, and duties affecting the revenues, tolls, and property of the said Chesapeake & Ohio Canal Company, and were especially affected with knowledge that such portions of the revenues and tolls of said Chesapeake & Ohio Canal Company as were necessary to put and keep the canal of the said company in good condition and repair for transportation, provide the requisite supply of water, and pay the salaries of officers and agents of the said company, were dedicated and set apart to such purposes by contract with the state of Maryland, and were under such contract exclusively applicable to said purposes.

The administrator filed a demurrer to each bill, which was overruled, and a final decree entered against him, and, upon his motion at the same term, the court ordered nunc pro tunc that the two suits be consolidated, "but so that the validity, force, and effect of neither of said decrees shall be by this order affected or impaired." He then appealed to this court.

Stewart Brown and Arthur Geo. Brown, for appellant. G. J. M. Gwinn, for appellee.

GRAY, J. An ordinary mortgagee of real estate, who has not taken possession under his mortgage, is not entitled to the rents and profits as against the mortgagor or his attaching creditors; and the same rule holds good in the case of a mortgage by a railroad, canal, or bridge corporation of its tolls and