(107 A.) nor In the present case, the qualified created right is not to an immediate appropriation of the property to the payment of the debentures, for they will not become due for many years, in the 1950's it appears; is the right one immediately to compel a legal mortgage, for this cannot, by the terms of the agreement, be done until the company undertakes to give a mortgage. But the term "lien" is not limited to rights of this sort. We may cite the words of Mr. Justice Erle to which reference was made on argument: "The words equitable lien are intensively undefined." Brundson v. Allard, 2 Ell. & Ell. 19. In Jones on Liens (3d Ed.) § 28, it is said: "In courts of equity the term 'lien' is used as synonymous with a charge or incumbrance upon a thing where there is neither jus in re nor ad rem nor possession of the thing. The term is applied as well to charges arising by express engagement of the owner of the property and to a duty or intention implied on his part to make the property answerable for a specific debt or engagement." After citing Mr. Justice Erle, supra, the text goes on: "And it is necessarily the case that something of vagueness and uncertainty should attend a doctrine that is of such a wide and varied ap plication as is this of equitable lien, and yet the principles are as well defined as other equitable principles, and their application to certain well-established classes of liens is well settled. To apply them to that indefinite class of liens which arises from the contracts of parties may be more difficult because these liens are as various as are the contracts, and precedents which exactly apply may not be found. This wide application of the doctrine is one element of the importance of this branch of equity jurisprudence." The cases and the text-writers amply bear out the statement made by Mr. Jones that these liens are as various as are the contracts of parties, and that precedents which exactly apply may not be found; and it is not the duty of a court of equity, in passing upon a given case, to limit and restrain itself in accordance with the facts of the more frequent and unquestioned classes of liens which arise and are enforceable directly for the payment of money, but the court must take into account the whole contract and the manifest intention of the parties, and determine whether or not the language under the circumstances used is reasonably and fairly to be construed as a stipulation that the specific property described in the contract shall be held and bound in the manner and for the purposes stated in the contract. As bearing upon this view, we cite further from Pomeroy's Equity, 8 1234, in which he discusses the origin and rationale of the doctrine with reference to the nature of the remedies of equity which are as a class specific, and then goes on: "When equity has jurisdiction to enforce rights and obligations growing out of an executory contract, this equitable theory of remedies cannot be carried out unless the notion is admitted that the contract creates some right or interest in or over specific property which the decree of the court can lay hold of and by means of which the equitable relief can be made efficient. The doctrine of 'equitable liens' supplies this necessary element and it was introduced for the sole purpose of furnishing a ground for the specific remedies which equity confers, operating upon particular identified property, instead of the general pecuniary recoveries granted by courts of law. It follows, therefore, that in a large class of executory contracts express and implied which the law regards as creating no property right nor interest analogous to property, but only a mere personal right and obligation, equity recognizes, in addition to the personal obligation, a peculiar right over the thing concerning which the contract deals which it calls a lien and which, though not property, is analogous to property, by means of which the plaintiff is enabled to follow the identical thing and to enforce the defendant's obligation by a remedy which operates directly upon that thing." In section 1235 the same author says: "In order, however, that a lien may arise in pursuance of this doctrine, the agreement must deal with some particular property, either by identifying it or by so describing it that it can be identified, and must indicate with sufficient clearness an intent that the property so described or rendered capable of identification is to be held, given or transferred as security for the obligation." In the present case it appears that the particular property is so described that it can be identified, for it is the property owned by the obligor at the date of the bond. We think it also clear that the covenant shows that the property so described is to be held by the obligor as security for the obligation in the covenant undertaken. See cases cited to note to section 1235, Pomeroy. Further, at the end of section 1235, he says, referring to various instances cited by him: "They show that the form is immaterial if the intent appears to make any identified property a security for the fulfillment of an obligation." In the comparatively recent case of Westall v. Wood, 212 Mass. 544, 99 N. E. 325, the court, speaking by Rugg, C. J., says, with reference to equitable liens: "But an equitable lien does not of necessity rest exclusively upon an express agreement. It may arise from circumstances of such nature as to require the presumption, upon general considerations of justice as between those conducting commercial transactions according to a reasonable standard of integrity, that an equitable lien was meant. Equity looks at the substance, and not at the form. If the arrangement between the parties, interpreted in the light of the conditions in which they were placed, indicates a contemporaneous intention to adjust their rights upon a basis which can be established only by resort to the equitable principle of lien or pledge, then, in the absence of an intervening adversary interest, such an intent will be executed in chancery." In the much-quoted case of Walker V. Brown, 165 U. S. 666, 17 Sup. Ct. 457, 41 L. Ed. 871, it is said: "To dedicate property to a particular purpose, to provide that a specified creditor and that creditor alone shall be authorized to seek payment of his debt from the property or its value, is unmistakably to create an equitable lien." ent possibility which changes into an assignment of the equitable ownership as soon as the property is acquired by the vendor or mortgagor." The recent English case, In re Lind, L. R. (1915) 2 Chancery Division, page 345, illustrates the principle. In 1905, L., who was one of the next of kin of his mother, was presumptively entitled to a share of her personal estate and assigned his expectant share to the N. society by way of mortgage. In May, 1908, he assigned the same share to A. by way of mortgage subject to the mortgage of 1905. In August, 1908, he was adjudicated a bankrupt, and in 1910 received his discharge. In 1911, L. assigned his expectant share to the I. syndicate. In 1914 L.'s mother died; and the question was whether under these circumstances his And again, citing Runkle v. Burnham, 153 U. S. 224, 14 Sup. Ct. 837, 38 L. Ed. 697: "If there be ambiguity in the contract, resort may be had to the situation of the parties and the circumstances under which it was entered into for the purpose, not of changing the writ-mortgages imposed merely a personal liabiling, but of furnishing light by which to ascertain its actual significance." ity affected by his discharge in bankruptcy, or whether the mortgages operated as a transfer of his share upon the death of his mother so that his two mortgages were entitled The oft-quoted language of Judge Story in Flagg v. Mann, 2 Sumner, 486, Fed. Cas. No. in priority to the I. syndicate. The court 4,847, is not without significance: "If a transaction resolve itself into a security, whatever may be its form, and whatever name the parties may choose to give it, it is in equity a mortgage [lien]." Note to Pomeroy's Equity, § 1237. held that the contract was more than a personal contract, that it created an equitable interest in the property, and that the mortgagees were entitled to priority. A number of the judges gave opinions, and we quote from the opinion of Swinfen Eady, L. J., page 360, where, after reviewing the authorities, he says: Perhaps the operation of the covenant under consideration may be illustrated by the somewhat analogous principle involved in the "It is clear from these authorities that an well-recognized equitable rule in case of a assignment for value of future property actually sale or mortgage of property to be acquired binds the property itself directly it is acquired in the future. In section 1236, Pomeroy says:-automatically on the happening of the event "It is well settled that an agreement to charge and without any further act on the part of the or to assign or to give security upon or to affect assignor-and does not merely rest in and property not yet in existence or in the owneramount to a right in contract giving rise to an action. The assignor, having received the ship of the party making the contract, or property to be acquired by him in the future, al- consideration, becomes in equity, on the hapthough, with the exception of one particular pening of the event, trustee for the assignee of species of things (those having a potential ex- the property devolving upon or acquired by him istence), it creates no legal estate or interest in which he had previously sold and been paid the things when they afterward come into existence or are acquired by the promisor, does constitute an equitable lien upon the property so existing or acquired at a subsequent time which is enforced in the same manner and against the same parties as a lien upon specific things existing and owned by the contracting parties at the date of the contract." Pomeroy cites the celebrated case of Holroyd v. Marshall, 10 H. L. Cases, 191, and many others. To these may be added Tailby v. Official Receiver, L. R. 13 App. Cas. 523. The same doctrine is applied with respect to the creation of an equitable title by the assignment of property to be acquired in the future. Pomeroy's Equity, § 1288. The rationale of the doctrine is in this same section explained as follows: "In truth, although a sale or mortgage of property to be acquired in the future does not operate as an immediate alienation at law, it operates as an equitable assignment of the pres for." The acquisition of the property was in fact a contingency, but this did not make the obligation a mere personal contract. In the present case the contingency is not one of acquiring the property, but of the giving of a mortgage. The application of the principle appears to be substantially the same. When the mortgage is given, automatically, in equity, the described property comes under it. No omission of the mortgagor, no attempt by it to limit the security to the later debts, will avail to shut out the debenture holders from sharing in equity in the security of the mortgage whether their debentures are named in it or not, whether the mortgagor attempted to exclude them or not. The plaintiff cites Western Bank v. Union Bank, 91 Md. 613, 46 Atl. 960. In that case a wife signed a note as maker with her hus (107 A.) band and added to her signature the words, "For the payment of which I bind my separate estate." That was a case where the rights of third parties as between themselves were involved, and the court held that the words did not, as against the rights of an attaching creditor, create an equitable mortgage. The case was somewhat affected by the statute concerning married women, but the court did say that if no rights of third parties were involved it would adopt the ruling in Hall v. Eccleston, 37 Md. 510, and hold that so far as the wife was concerned such an agreement would constitute as between the parties an equitable lien to be enforced in equity as being somewhat in the nature of an equitable mortgage. The plaintiff next cites Mathews v. Damainville, 100 App. Div. 312, 91 N. Y. Supp. 524. It appears that Mrs. Romeyn owed Mathews & Co. $2,000 evidenced by a bond dated March 20, 1899. The bond also recited that foreclosure proceedings were pending against the obligor, and she bound herself to pay the $2,000 out of the balance left to her after the conclusion of the foreclosure. She further agreed that if the foreclosure proceedings should, for any reason, be set aside or discontinued, she would, upon demand, execute a proper bond and mortgage to secure the said Mathews & Co. the payment within six months of such amount as should at that date be due them. The instrument was recorded April 4, 1899; the foreclosure proceedings were discontinued April 21, 1899. The bond was not paid and Mrs. Romeyn conveyed the land to a third person, and the title subsequently came to the defendant, and the case turned on the question of notice by the record of the obligation arising under the contract with reference to a bond and mortgage. Three out of the five judges held that, the instrument having been recorded before the discontinuance of the foreclosure suit, it was not, when the record was made, notice under the Recording Act because the contract was an executory contract to give a mortgage, and at the time of the record there was not an equitable mortgage or lien and no action could have been brought to enforce it. The Recording Act provided for the registry of any written instrument by which any estate or interest in real property is created, transferred, mortgaged, or assigned or by which the title of any eal estate may be affected. Two judges held otherwise, and that the instrument was an equitable mortgage and the record, though made prior to the discontinuance of the foreclosure suit, was notice. The further question of actual notice was involved, but that part of the case is not material here. then turned on the technical question of notice by the record, and the court appears to hold that there must be in existence a present right of foreclosure of the equitable lien created by the instrument at the time of the record. This we think is too technical and narrow a view of what is meant by an equitable lien. The opinion of the minority appears preferable. The same matter was before the court in People v. Woodruff, 75 App. Div. 90, 77 N. Y.,Supp. 722, where it was unanimously held that an equitable lien was created by the instrument itself without any demand from the obligor after foreclosure proceedings were discontinued. The court, in discussing this proposition, said that there was a distinct and positive agreement to execute a mortgage to secure the $2,000 conditioned upon the discontinuance of the foreclosure and that the intent was plain; that she first intended to pay out of the surplus money upon the foreclosure, but if she could not do that she agreed to give a lien by mortgage upon the land itself, and that the demand was not a condition precedent to any liability of Mrs. Romeyn's part under the agreement; that her obligation arose at once and that there was nothing in the claim made that it did not accrue until the mortgage was demanded. In other words, the equitable lien as a consummated fact arose ex proprio vigore from the contract itself whenever the contingency provided for happened. We are unable to understand how a record made before discontinuance could in and of itself become notice of what occurred after discontinuance, except upon theory of a contingent lien from the giving of the instrument. There is all the time an agreement to give a lien, and in equity this is binding upon the parties and in full force as between them as affecting and binding the land for the purposes of the agreement. That the final step in the erection of an enforceable mortgage as such depended upon a contingency does not, as we have seen heretofore, affect the nature of the agreement. But, whatever conclusion may be reached upon the whole record of this case, it is not of sufficient authority to be decisive upon the point at issue. Next, the plaintiff cites the old case of Williams v. Lucas, 2 Cox, Cases in Chancery, 160. We do not see the relevancy of this case unless upon the point of identification of property, and that seems to be met by the terms of the covenant we are considering. In the case cited the testator had given a note and promised to give security by mortgage of lands when required. What the court said was: "That the creditor had taken a personal The majority admits that had the recording for a real security which, however, had not security reserving to himself the power of callof this same instrument been made after the been done, and therefore it was impossible to foreclosure had been discontinued the ques- say that this debt was a charge on any particution would have been different. The case lar lands." clearly their force if taken seriously. Omitting certain parts of his admitted statement as explanatory of what he was saying, the language he used pertinent to these debentures, in view of the present question of the creation or non-creation of a lien, is as follows: The covenant now under consideration does [mal statements," as urged by counsel, who see not operate as creating a power in the obligee to bring into existence a lien or mortgage by demand. That right is independent of any demand. The covenant does contain an absolute, though contingent, obligation on the part of the obligor to perform the duty imposed by the contract. Williams v. Lucas, was based upon Freemoult v. Dedire, L. P. Williams, 429, which holds that the covenant to settle lands of certain value without mentioning any land does not specifically bind any lands, but the covenant to settle his lands in Rumney Marsh for life constituted a specific lien. Accordingly, both these cases are cited in the books on the question of identification, or specific designation of property. Pomeroy's Equity, § 1235, note 3; Story, Equity, 1657, note 2; Spencer, Equity, 777, note (d). "This gives the New York, New Haven & Hartford Railroad Company an investment of $10,000,000 in the Consolidated Railway Company to which the Consolidated Railway Company debentures are a prior lien. The New Haven road must protect these bonds so as not to sacrifice their own investment which makes the bonds a moral obligation, though not a legal one, of the New Haven & Hartford Railroad Company. They are also practically a first mortgage on the Fair Haven & Westville system as well as on a few of the unmortgaged roads. * * * The main object of the petition to make the bonds legal for Connecticut is to broaden the mar ket and thus enhance the value of the bonds, as well as to have as little difference in the and the New York, New Haven & Hartford values of the Consolidated Railway Company Railroad Company bonds (as possible).” There is one further element in the present case worthy of notice. Dresser v. Hart-savings banks * ford Life Ins. Co., 80 Conn. 681, 70 Atl. 39, involved the construction of a life insurance contract, and the question arose as to the admissibility of circulars and statements of the company placing a construction on the contract. The court said, on page 703 of 80 Conn., on page 47 of 70 Atl., omitting citations: "It would be at least a constructive fraud for the insurance company, under an interpretation by it of the language of the certificates in direct variance with the representation of these circulars, to use the moneys of the 'safety fund' department to the injury of the plaintiffs. * The alleged written statements of the company would be admissible in evidence as showing, in connection with proof that the plaintiffs relied upon it, the interpretation which the parties themselves placed upon the contract of insurance. They tend to prove that when the plaintiffs received these certificates, and paid from time to time the sums required to be paid by the certificates, both they and the insurance company understood the contract alike." From this point of view, we think great weight is to be attached to the statements of Mr. Mellen in 1905 before the legislative committee, when urging that these debentures be made a legal investment for Connecticut Savings banks. Mr. Mellen was president, not merely in title, but the actual head and director of the policies of the New Haven road and its corporate agencies including the Consolidated Railway Company. He was urging the adoption of a law of vital importance to savings banks and trustees, and his words were intended to be taken and must in fact have been taken as uttered honestly and under a sense of responsibility, not only to the legislative committee which he was immediately addressing, but to all of those whose interests might be affected by the doings of this committee. His words are not Mr. Mellen had stated that the New York, New Haven & Hartford Railroad Company owned the entire $10,000,000 Consolidated Railway Company stock, and it is therefore argued that of course these debentures must be taken care of to protect the investment of the $10,000,000 in the Consolidated Railway Company. While that is quite true, it does not justify the characterizing of these debentures as a prior lien unless the intention was to convey the idea that they were in fact a prior lien, with the substantial attributes of a lien. There can be no possible misunderstanding of the inference conveyed and intended to be conveyed by these words, that these bonds were in effect a lien or mortgage. And this idea is clinched by saying that they were "practically a first mortgage on the Fair Haven and Westville system," which latter, by the way, is the specific property the plaintiff expressly asks to be declared free of any lien. It is not necessary here to draw any fine distinction between lien and mortgage although there is a substantial difference, as we have heretofore indicated. The basic idea conveyed by Mr. Mellen was that the properties were specifically charged with the obligation of these debentures. His object, as stated by him, was to enhance the value of the bonds and to make their value as nearly as possible that of the New York, New Haven & Hartford Railroad Company bonds outstanding. At that time, in 1905, to say a debenture was as good as a bond of the New York road meant something, and Mr. Mellen, as president of the New Haven road and of the Consolidated Railway Company, clearly carried the idea that the debentures (107 A.) cause in fact they constituted a lien on the ligation placed by the Legislature upon the properties of the company and were practi- New Haven road, presumably as just and cally a first mortgage of the Fair Haven & equitable, in 1915. The amendment may be Westville system and a few unmortgaged of benefit to the debenture holders, but it roads, were as good a security as the New does not operate to discharge or modify the Haven road bonds. If so, confessedly it could contract obligations of the Consolidated Railonly be because they had the properties of the way Company, and this action is not conConsolidated Railway Company back of them cerned with the properties of the New Haven and tied to them by the terms of the deben- road but the properties described in the detures. Mr. Mellen for the Consolidated Rail-bentures of the Consolidated Railway Comway Company succeeded in his proposition, pany. The same may be said of the general and by chapters 184 and 207 of the Public act of the Massachusetts Assembly to the Acts of 1905 all bonds of the Consolidated same effect and passed in the same year, 1915 Railway Company were made a legal savings (St. 1915, c. 303). bank investment. While Mr. Mellen's statements and these charts of course do not make the contract, they are definite and forcible expositions of what the company, at the time the debentures were issued, believed the contract to mean, and at any rate are what it wished the savings banks and other investors should believe that it meant. [4] Attention is called to section 7 of a Special Act of the General Assembly of Connecticut, approved May 19, 1915 (17 Sp. Laws, pt. 1, p. 367), amending the charter of the New York, New Haven & Hartford Railroad Company, providing, among other things, as follows: "Any mortgage executed by said company shall secure, on equal terms with any other indebtedness secured by such mortgage, all bonds, debentures, and notes previously issued and at such time outstanding of which said company is the maker or which it has assumed through merger or consolidation with the original and principal obligor, except outstanding bonds, debentures, or notes while and so long as the same are, in accordance with any promise contained therein, secured by another direct mortgage." In conclusion, counsel for the company say in their brief: "All that the debenture holders had the right to insist upon was that their position as unsecured creditors should not be put at hazard by a mortgage in which they would have no interest." And yet, in view of this concession, the company, by its prayer for relief, is now asking and arguing that it be determined that it now has the power to mortgage these properties "without providing in and by such mortgage for participation in the security thereof by the holder of any of said debentures." All that we hold, and what we do hold, is that the covenant securing this right is binding as a personal contract and that, as between the parties, it is in equity binding upon property as a charge or incumbrance in the nature of a lien enforceable as such to the extent of fully protecting and making available this right conceded to exist in the debenture holders as an equitable charge good between the parties and binding upon any mortgagee taking with such notice as binds one to the recognition of existing equities with respect to specific property. Although it ought to be needless, we cannot refrain from commenting upon the fact that counsel for the company have, at length, both at the beginning and end of their brief, seriously urged the financial necessities of the company. To have the question of power definitely settled is a sufficient reason for bringing the action, and we construe this enlargement on the admitted necessities of the company as being merely explanatory of why the action was brought. The construction of contracts is not to be controlled by the subsequent misfortunes, however inevitable or unIt appears that the New Haven Company escapable they may have been, of the consucceeded to and became bound by and as-tracting party. The covenant in question sumed the obligations contained in said debenture bonds. That the New Haven road as constituted in 1915 has assumed these debentures, and that, by its charter, it has now imposed upon it the mortgage obligation stated in said amendment, cannot affect or control the Consolidated Railway Company or its successor, the Connecticut Company. The obligation of the latter companies is a contract obligation anticipating by ten years the ob107 A.-42 was given for the very purpose of protecting the debenture holders, in some measure at least, against such conceivable, although then hardly deemed possible, situation as now exists. The superior court is advised to answer questions 1, 2, and 4 in the affirmative, and question 3 in the negative. In this opinion RORABACK and WHEELER, JJ., concurred. PRENTICE, C. J., and |