its dependencies, and to prevent any interruption of its business, which would materially impair the value of the road and the security of its mortgagees and creditors.

Invested with these powers the defendant Jewett, on the 25th day of May, 1875, took possession, not only of the property and effects of the Erie Ry. Co., but also of the Erie and Genesee Valley railroad and all of its property and appurtenances, and continued to hold possession, and operate it in connection with the other lines belonging to the Erie Ry. Co., until they were sold under the decree of foreclosure entered in the action instituted by the Farmers' Loan and Trust Co., in the spring or summer of 1878, at which time the possession of the property by the receiver terminated.

In view of the fact that the Erie and Genesee Valley railroad was named in the papers upon which such order was based as one of the leased roads, and its rental was described as being $8400 annually, no question can arise as to the meaning and construction of the order, or as to the contemplation of the occupation of that road, and the payment of that sum as the rental thereof.

The receiver having been appointed in an action wherein all of the mortgagees and lien holders of the property of the Erie Ry. Co. were parties defendant, by orders which have not been modified or appealed from and in which all parties have acquiesced, they cannot now be allowed to dispute or question the power conferred upon him by such orders. The court had full power and authority, by virtue of the statutes, and under its jurisdiction as a court of equity, exercising its power over the estate of an insolvent corporation, to direct the manner in which the property of such corporation should be managed and conducted while in the possession of the receiver, and the conditions upon which such funds should be paid out.

It would seem to be entirely immaterial as to the source whence the funds in the hands of the receiver were derived or whether the particular portion of such road covered by mortgages contributed more largely to such fund than other portions not subject to such liens. Under the orders in question the receipts, from whatever source derived, were to form one common fund applicable in the first instance to the discharge of the obligations which the receiver was thereby authorized to incur.

Whatever might be the respective rights of the various parties to this action as between themselves to priority in the participation of the assets of the insolvent Erie Ry. Co., such rights could affect only the property remaining after the liabilities created under the receivership had been fully paid and satisfied. Under the orders referred to it was not only within the power of the receiver to assume the obligations of the several leases referred to, so far as the payment of rent either due or to grow due thereon was con

cerned, and discharge the same with any funds in his hands, but he was further authorized to bind even the corpus of the estate without regard to the rights of the several mortgagees therein in exercising the authority conferred upon him. Miltenberger v. Logansport R. R. Co., 106 U. S. 286; s. c., 12 Am. & Eng. R. R. Cas. 464; Langdon v. Vt. Cent. R. R. Co., 50 Vt. 500; 53 id. 230; 54 id. 503; s. c., 4 Am. & Eng. R. R. Cas. 33; 11 id. 688.

The receiver was not only thus authorized to assume the obligations of the lease and bind the estate in his hands to the payment of the rent accruing thereon, but by entering into the possession of and occupying such leased property he manifested by an unequivocal act his election to regard the continuance of such lease as beneficial for all of the parties interested, and his intention to continue the interest acquired by the Erie Ry. Co. under such lease. He could not take possession of the property and enjoy its use and occupation without incurring a liability for the payment of the rent under the lease by which his predecessor secured its possession. The principles which govern the liability of an assignee of a lease seem to be applicable to the case of a receiver, and he would be equitably and legally chargeable with the payment of rent under a lease for such time as he continued to occupy the property demised.

While it was competent for him at any time to negotiate a new and secure a modification of the terms of the lease with the consent of the various parties interested, or to repudiate the lease and surrender the property, yet not having done so he must be held to have continued his acceptance under the terms and conditions of the existing lease as to the payment of rent thereon.

His position has been said to be analogous to that of an executor who takes possession and enjoys the occupation of property held under a lease by his testator. He thereby becomes liable for the payment of the rent accruing during his occupation of the premises according to the terms of the lease under which it was acquired. Martin v. Black, 9 Paige, 641. The assignee of a bankrupt also occupies an analogous position and is subject to a similar liability.

While we regard these considerations decisive of the receiver's liability, we have not failed to notice the argument of the respondent as to the equities of the parties founded upon the assumed inability of the leased road to earn the amount of the rent secured by its lease.

If the lease in question was an unprofitable one for the receiver to continue, it was optional with him at any time to terminate it by a surrender of the demised premises and thus avoid liability thereunder.

It seems to us, however, that it does not necessarily follow that

the value of any specified portion of an extensive railway system can be measured with exactness by the amount of the receipts of such particular portion. Its value as a feeder or connecting link in such a system may be largely disproportioned to the actual sum received for transportation over it. Such considerations, influential as they might be in affecting the action of parties in negotiating a contract for the use of a railroad, would preclude a court from holding that the actual receipts of a road thus situated constituted an equitable basis for fixing the compensation to be paid for its use.

If the plaintiff in a proceeding of this kind should be held to the principles upon which courts of equity sustain actions to compel the specific performance of contracts, we think, within the authorities, he has entitled himself to the relief sought.

The principle upon which such jurisdiction is based is defined generally, to be those cases where there is the breach of a contract which was binding in law, but the remedy at law is inadequate. 3 Parsons on Contracts, 352.

It is quite obvious that this is a case within the rule.

The plaintiff by his covenants with the Erie & Genessee Valley R. R. Co. has not only subjected himself to an action on behalf of such company to compel him to pay the interest upon its bonds, but he has also become thereby liable to a similar action on behalf of each of the bondholders secured by the mortgage of this road. He has thus subjected himself to numerous actions and has been put into the possession of the property from which the means for the payment of these claims was expected to be derived. In consideration of the transfers to it by the plaintiff of the same property, the Erie Ry. Co. expressly covenanted to assume the payment of such interest and to relieve the plaintiff from his liability therefor. The defendant has placed in the hands of the plaintiff the property which was the consideration of, and inducement for, such promises. Although the plaintiff, upon the payment of such interest, may be entitled to recover it back from the Erie Ry. Co. in an action at law, he is under no equitable obligation to pursue such a course. It furnishes a good equitable reason for not requir ing such a proceeding in this case that it would necessitate the raising by him in each year of a large amount of money, which would certainly be difficult, and might be impossible, without the aid of the property which was the consideration of his promise to make such payment. Under such circumstances it would seem to be grossly inequitable to throw upon him the burden of carrying those obligations, while the party ultimately liable for their payment retains the property and unjustly repudiates the obligation by which it was acquired. It is perfectly apparent that if the plaintiff were confined to his remedy at law, that the damages to which he would thereby be entitled, would be quite inadequate to

compensate him for the loss which he might and probably would sustain.

Although the plaintiff by virtue of his covenant with the Erie & Genessee Valley R. R. Co. was originally primarily liable to pay such interest, yet through his contract with the Erie Ry. Co., he, so far as the latter was concerned, has become a mere surety for the payment of the debt, and has the right to call upon it to indemnify and protect him from his collateral liability. A surety who has placed the means for paying a debt into the hands of another, under a covenant to pay the same, can maintain an action in equity to compel the performance of such covenant without first paying the debt, and is not limited to his action on such covenant.

The principles decided in Marsh v. Pike, 10 Paige, 595, seem to be fairly applicable to this case. In that case a mortgagor who had sold and conveyed the land covered by the mortgage, subject to the same, and the payment thereof had been assumed by successive grantees thereafter, was held to be entitled to maintain his action against such subsequent grantees to compel them to pay off and discharge such mortgage. It was held that he was under no legal obligation to pay the mortgage and enforce his claim under the right of subrogation, but that he could file his bill directly and compel the specific performance by his grantees of the covenant to pay. Similar in principle are the cases which hold that the subscriber for stock in an incorporated company upon a sale thereof and the covenant of his vendee to pay and discharge the liability of such subscriber to the corporation, may maintain his action to compel such vendee to perform his contract. Cheale v. Kenward, 60 Eng. Ch. 27; Tod v. Taft, 7 Allen, 371; Leach v. Fobes, 11 id. 506.

The other questions raised and argued in this case are necessarily involved in and determined by the conclusions arrived at in the foregoing opinion.

We are, therefore, on the whole case, of the opinion that the general term erred, and that the order for a new trial should be reversed, and the judgment of the special term affirmed. All concur.

Order reversed and judgment affirmed.

Lease. A railroad company has no power, without express legislative authority, to lease its road and franchises to another company. Kean . Johnson, 1 Stockt. 401; Black v. Del. & Rar. Canal Co., 7 C. E. Gr. 130; 9 C. E. Gr. 455; Troy R. R. Co. v. Kerr, 17 Barb. 581; Clark v. Omaha R. R., 5 Neb. 314; Johnson v. Shrewsbury R. R., 17 Jur. 1015; 3 De G., M. & G. 914; McMillan v. Mich. South. R. R., 16 Mich. 79; Shrewsbury R. R. v. London R. R., 17 Jur. 845; Occum Co. v. Sprague Co., 34 Conn. 529; Thomas v. West Jersey R. R., 101 U. S. 71; East Anglian R. R. v. Eastern Co. R. R., 11 C. B. 775; Campbell v. Marietta R. R., 23 Ohio St. 168; Lauman .. Lebanon Valley R. R., 30 Pa. St. 42; Pinto Co. Case, L. R. (8 Ch. Div.) 263;

Boston R. R. v. New York R. R. (R. I.), 23 Alb. L. J. 518; Campbell's Case, L. R. (9 Ch. App.) 1; Simpson v. Westminster Co., 8 H. L. Cas. 712; Era Ins. Co., 6 Jur. (N. S.) 1334; Smith v. St. Louis Ins. Co., 2 Tenn. Ch. 727; Price v. St. Louis Ins. Co., 3 Mo. App. 262; Cozart v. Georgia R. R., 54 Ga. 379; Abbott v. J. G. & K. H. R. Co., 2 Am. & Eng. R. R. Čas. 541; Boston & P. R. R. Co. v. N. Y. & N. E. R. R. Co., 2 Am. & Eng. R. R. Cas. 300; Troy & Boston R. Co. v. Boston, H. T. & W. R. Co., 7 Am. & Eng. R. R. Cas. 49.

STEWART et al.

v.

HOYT'S EXECUTORS.

(111 United States Reports, 373.)

By a lease from one railroad corporation of its railroad to another railroad corporation, subject to a previous mortgage, the lessee covenanted to pay as rent a certain proportion of the gross earnings, and to state accounts semiannually, and further covenanted, if the rent for any six months should be insufficient to pay the interest due at the end of the six months on the mort gage bonds, then to advance a sufficient sum to take up, and to take up the balance of the coupons for such interest; and it was agreed that for all sums so advanced the lessee should have a lien before all other liens except the mortgage. Eighteen months later, after the lessee had accordingly paid and taken up some coupons, and had declined to take up others, on account of the refusal of the lessor to accept in payment of rent coupons so taken up, the two corporations executed a supplemental agreement, by which, in lieu of the rent reserved in the lease, and of all advances of money to take up coupons, the lessee covenanted to pay, and the lessor to accept, as rent, a larger proportion of the gross earnings, "all accounts being settled exactly, and all liabilities and obligations between the two companies being adjusted and discharged by and upon the semi-annual statements provided in said lease;" the lessor released the lessee from any obligation to make future advances of money to take up coupons, and from liability for any previous neglect to make such advances, and from any obligation to pay money in the nature of rent and advances, except the proportion of the gross earnings stipulated in the supplemental agreement; and all the provisions of the lease, except as so modified, were ratified and confirmed, and "all causes of action for breach of any agreement therein contained," which had arisen since its execution, were mutually waived and released. The lessee afterwards paid rent computed according to the supplemental agreement. Held, that any claim of the lessee against the lessor, or against the mortgaged property, for money paid to take up coupons, was released and discharged.

THIS was an appeal from a decree dismissing a petition of the trustees of the Wisconsin Central R. R. Co. to be allowed, out of the proceeds of a sale of the railroad property and franchises of the Milwaukee & Northern Ry. Co., under the foreclosure of a mortgage thereof to trustees (of the survivor of whom the appel

16 A. & E. R. Cas.-33