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the twenty-first day of August, in the same, signee of the senior partner of the debtor firm year, he made a voluntary assignment of all individually can maintain the present suit to his property, real and personal, in trust for recover back the money paid to the respondhis creditors, under the laws of the State. ents by the debtor firm. Subsequent disclosures made known to some Questions of importance are, doubtless, inextent the secret arrangement between the ap- volved in the first two assignments of errors; pellants and the insolvent debtors, and there- but in the view taken of the case by the court, upon certain creditors of the latter petitioned those questions will not be examined in this the proper district court that the senior part-investigation. ner of the debtor firm might be adjudged a Waiving the first two errors assigned, the bankrupt, alleging for cause, among other single question presented for decision, is things, the preferential payment made to the whether the complainant, as the assignee of appellant, as one of the acts of bankruptcy the estate of an individual partner of a debtor committed by the insolvent debtor. Pursuant copartnership, can maintain a suit to recover to that petition, the senior partner of the back money *previously paid to a cred- [*401 debtor firm was adjudged a bankrupt. itor of the copartnership, upon the ground that the money was paid to such creditor in fraud of the other creditors of the firm and in fraud of the provisions of the Bankrupt Act. Assignees in bankruptcy of the estate of an insolvent copartnership may, perhaps, maintain such a suit for such a claim, even though the money was paid by an individual partner under such an agreement to compromise his separate debts, as the assignees in such a case are required to keep separate accounts of the joint stock or property of the copartnership and of the separate estate of each member of which the copartnership is composed; and the provision is that the net proceeds of the joint stock and property shall be appropri ated to pay the creditors of the copartnership, and that the net proceeds of the separate estate of each partner shall be appropriated to pay his separate creditors.

Due proceedings followed, and on the 4th of January, 1870, the appellee was appointed assignee of the estate, real and personal, of the bankrupt. Subsequently he demanded that the appellants should pay back the several sums which the insolvent debtors paid to them under the compromise agreement, and it appears that, the appellants having refused to comply with the demand, he, the assignee, instituted the present suit to recover the amount, in which he prayed for an account, and that the respondents may be decreed to pay over the amount to the complainant for the benefit of the estate of the bankrupt senior partner. Service was made, and the respondents below appeared and filed a plea and an answer. They pleaded, to so much of the bill of complaint as alleged that the money was paid in fraud of the other creditors and in fraud of the provisions of the Bankrupt Act, that the payments were made more than four months before the petition in bankruptcy against the senior partner of the insolvent firm was filed. In their answer, filed at the same time, they admit the execution of the compromise agreement, but deny that they ever entered into any fraudulent arrangement, combination or conspiracy with the said senior partner, to circumvent, deceive or cheat the other creditors, or to obtain any fraudulent preference or advantage, as alleged in the bill of complaint. Bankruptcy proceedings were instituted and prosecuted against the senior partner of the debtor firm, but not against the firm or the other partner of the same, in consequence of which the respondents alleged as a defense in their answer, that the assignee never acquired any right, title or interest in or to any of the estate, real or personal, of the debtor firm, nor in or to the alleged claim or cause of action set forth in the bill of complaint. Proofs were taken, and the parties having been fully heard, the circuit court entered a decree in favor of the complainant as prayed in the bill of complaint, and the respondents appealed to this court.

Since the case was entered here, the respondents below have filed the following assignment of errors: (1) That the circuit court erred in holding that the respondents were liable to repay the fifty per cent. of their debt paid to them by the debtor firm under the compromise agreement. (2) That it was error to hold, even if they were liable at all, that they were liable to repay what they received subsequent to signing the compromise stipulation, which is just two thirds the amount. (3) That the circuit court erred in deciding that the as

None of the proceeds of the separate estate of the individual partners can be appropriated to pay the partnership debts, unless the proceeds from that source exceed what is necessary to pay the separate debts of the partner, nor can any part of the proceeds of the joint stock or property of the copartnership be appropriated to pay the separate debts of the individ ual partner, unless there is an excess from that source beyond what is required to pay the partnership debts. 14 Stat. at L., 535.

These regulations show that, in cases where they apply, the assignees in bankruptcy of the joint stock and property of a copartnership are required to administer the separate estate of the individual members of the firm or company as well as the described estate of the copartnership, but the Bankrupt Act contains no regulations of a corresponding character applicable in a case where an individual member of a copartnership is adjudged a bankrupt without any such decree against the copartnership or the other partner or partners of which the copartnership is composed.

Instead of that, the Bankrupt Act provides that in all *other respects the proceed- [*402 ings against partners shall be conducted in the like manner as if they had been commenced and prosecuted against one person alone. Partners are not entitled in any case to come in competition with the joint creditors upon the partnership funds, whatever may be the rights and equities which would otherwise attach between them and the bankrupt partner or partners.

Where all the partners become bankrupt the general rule is that the separate estate of one partner shall not claim against the joint estate of the partnership in competition with

the joint creditors, nor shall the joint estate | the partners are insolvent, even though some claim against the separate estate in compe- of them may not be in bankruptcy. Ayer v. tition with the separate creditors. McLean v. Brastow, 5 L. R., 501; Murray v. Murray, 5 Johnson, 3 McLean, 202. Johns. Ch., 60; Barker v. Goodair, 11 Ves., 86; Smith v. Stokes, 1 East, 367; Parker v. Muggridge, 2 Story, 348.

*

Doubt upon that subject cannot be entertained, and it is equally clear that a solvent partner cannot prove his own separate debt Assets are to be marshaled between the against the separate estate of the bankrupt creditors of the copartnership and the [*404 partner, so as to come in competition with the separate creditors of the partners only when joint creditors of the partnership, for the there are partnership assets and separate plain reason that he is himself liable to all the assets of individual partners, and proceedings joint creditors, which is sufficient to show have been instituted against the partnership that in equity he cannot be permitted to claim and the individual members, as provided in any part of the funds of the bankrupt before the 36th section of the Bankrupt Act. all the creditors to whom he is liable are fully parte Leland, 5 Nat. Bk. Reg., 222; Ex parte paid. Emery v. Bk., 7 Nat. Bk. Reg., 217. Downing, 1 Dill., 36.

Neither can a solvent partner prove against the separate estate of the bankrupt partner in competition with the separate creditors of the bankrupt until all the joint creditors of the partnership are paid or fully indemnified; for if a dividend were reserved to such a party on such proof the joint creditors might be injured by such solvent partner, stopping the surplus of the separate estate, which would otherwise be carried over to the joint estate, or the separate creditors might be injured by the funds being stopped and the transmission of the same be delayed. Story, Part., 406; Rob. Bankruptcy, 2d ed., 621; Ex parte Lodge & Fendal, 1 Ves., Jr., 166; Ex parte Maude, L. R., 2 Ch. App., 555.

Two exceptions are admitted to that rule: 403*] (1) Where *the property of a partner has been fraudulently applied for the purposes of the partnership. (2) Where a distinct trade is prosecuted by one or more of the members of the firm.

1 Deac., 3d ed., 852.

Ex

Certain exceptions also exist to that rule where both the joint and separate estates are administered by the assignees of the copartnership. Ex parte Leland, 5 Nat. Bk. Reg., 229. Many decided cases support the proposition that the bankruptcy of one partner operates as a dissolution of the copartnership, but such an adjudication obtained by one partner against another will not be sustained if the real object of the petitioner is to dissolve the firm and the adjudication is not required for any other purpose. Shelf. Bankruptcy, 3d ed., 186; Ex parte Christie, Mont. & B., 314; Ex parte Brown, 1 Rose, 151; Ex parte Johnson, 2 Mont. D. & De G., 678.

Involuntary proceedings in bankruptcy were instituted in this case against the senior partner of the copartnership, and it is conceded that no such proceedings have ever been commenced against the copartners or the other partner. Proofs were introduced to show that the other partner was largely indebted to the firm, and it may be conceded that the proofs Subject to the preceding rules, as explained, are sufficient to show that the firm is insolthe solvent partners retain their full right, | vent, but there is nothing in the record to show power and authority over the partnership that the complainant possesses any other auproperty after bankruptcy, in the same man-thority to maintain the suit than what he dener and to the same extent as if no bankruptcy rives by virtue of his appointment as assignee of a particular partner had occurred. Their of the estate, real and personal, of the banklien also remains in full force, not only to have rupt senior partner of the copartnership. the partnership funds applied to the discharge of the partnership debts and liabilities, but also to the discharge of all the debts due by the partnership to them or any one of them, as well as for their own distributive shares, if any, in the surplus. Bump, Bankruptcy, 7th ed., 660; Colly. Part., 3d Am. ed., § 860. Debts due by the bankrupt partner to the partnership are entitled to priority in prefer-mise agreement *were partnership debts [*405 ence to the debts due by him to his separate creditors, and if the joint funds prove insufficient to discharge his debt to the partnership the solvent partners have a right to prove the deficiency against the separate estate of the bankrupt pari passu with the separate creditors. Bump, Bankruptcy, 7th ed., 220.

Bankruptcy, it is said, when decreed by a competent tribunal, dissolves the copartnership, but the joint property remains in the hands of the solvent partner or partners, clothed with a trust to be applied by him or them to the discharge of the partnership obligations and to account to the bankrupt partner or his assignee for his share of the surplus. Ex parte Norcross, 5 L. R., 124; Harvey v. Crickett, 5 Maule & S., 339.

Exceptions undoubtedly exist to that rule where it appears that the partnership or all

Repeated decisions have settled the rule that an assignee of the estate of an individual partner has no such title as will enable him to call third parties to an account for partnership property, and it is difficult to see why that rule does not dispose of the case before the court. Bump, Bankruptcy, 660.

All of the debts embraced in the compro

and the payments made to procure the signature of the appellants were made to discharge those debts; nor is the question affected in the least by the fact that some small part of the fund used to make those payments was earned by the senior partner in transacting the business of the copartnership subsequent to the time when the firm suspended payment. Most of the amount, it is conceded, was taken from the partnership assets, and the whole was paid as being the money of the copartnership.

Money paid under such circumstances, if it can be recovered back at all, must be claimed by the partnership in whose behalf it was paid, or by an assignee duly appointed to administer the joint estate, as it is quite clear that neither an individual partner nor his assignee can call the party to whom such a payment has been made to an account for such a pay

ment any more than he could for any other debt due to the copartnership. If liable in fact, a voluntary payment to the appellee would not discharge the obligation, as the liability, if it exists, is to another party; nor would a judgment in this case, even if satisfied, be a bar to a subsequent suit in the name of the partnership or their duly appointed assignees.

and acquired the right to sell, the lands were subject to taxation. Liability to taxation is an incident to all real estate. Exemption is an exception. When claimed, to be effectual, it must be clearly made out.

the railroad itself, does not impose a tax upon the 3. A state Act imposing a tax with reference to lands owned by the company not used nor necessary in operating the road.

lands specified from local taxation for three years,

4. A provision in a state Act, exempting tho

was not a contract. There was no consideration.

It was the promise of a gratuity spontaneously made which might be kept, changed or recalled at pleasure.

5. The taxing power may be restrained by contract in special cases for the public good. scrutinized and never permitted to extend, 6. Where the contract exists, it is to be rigidly either in scope or duration, beyond what the term of the concession clearly require. [No. 364.]

Two principal suggestions are made in support of the theory set up by the appellants: (1) That all the parties concerned in the attempt to effect a compromise between the debtors and their creditors proceeded as if the copartnership had previously been dissolved and as if the assets and effects of the debtor firm had been placed in the hands of the senior partner in trust to settle up the affairs of the compromise notes. (2) That the other partner A ed States for the Western District of debtors with their creditors and to pay the Argued Feb. 18, 1875.

never assented to the compromise agreement, nor was he, in fact, a party to the final arrangement, and that the copartnership name was signed to the compromise agreement and to the notes without his authority.

Issuable matters are certainly involved in those propositions, but suppose they are fully proved, they are not sufficient to show that the 406*] other partner ever conveyed his *interest in the assets and effects of the copartnership to the bankrupt partner, or that he ceased to be a joint owner of the same when the estate of the bankrupt partner was assigned and conveyed to the complainant below as his assignee. Harrison v. Sterry, 5 Cranch, 302. Nothing is exhibited in the record to warrant the conclusion that the copartnership was ever in fact dissolved before the decree in bankruptcy against the senior partner, and as the compromise notes were given in the name of the copartnership, the other partner mained liable for their payment.

Decided Mar. 1, 1875. PPEAL from the Circuit Court of the Unit

Michigan.

The history and facts of this case are fully stated by the court.

Messrs. J. S. Black, Titian J. Coffey, William L. Webber, M. J. Smiles and W. Darwin Hughes, for appellants:

The State cannot tax the national domain, nor restrain nor interfere with the power of Congress to transfer it as it pleases, nor deprive the grantees of any rights under the national grants.

Gibson v. Chouteau, 13 Wall., 92, 20 L. ed. 534; Brewer v. Kidd, 23 Mich., 440.

Under this uncontrolled power, Congress granted these lands to the State for the specific and exclusive purpose of aiding in the construction of these railroads; for that use and purpose only; to be disposed of only as the work progressed; to be applied to no other re-purpose whatsoever; to be subject to the disposal of the Legislature, for the purpose afore said; to be disposed of by said State only in manner following. By such careful iteration is the grant limited to the express purpose.

Decree reversed and the cause remanded, with directions to dismiss the bill of complaint.

CHARLES R. TUCKER et al., Appts.,

v.

NELSON FERGUSON et al. (See S. C., 22 Wall., 527--576.) State taxation of lands granted to railroads― when allowable-tax on railroad-provisions exempting from tax-contract to restrain

taxation.

To enforce this purpose the penalty is added, that "If any of said roads are not completed within ten years, no further sales shall be made, and the lands unsold shall revert to the United States."

By Act of Feb. 17, 1865, 13 Stat. at L., 569, and again by Act of Mar. 3, 1871, 16 Stat. at L., 582, Congress granted to the Flint and Pére Marquette Company further time for completion, and extended the time of reversion until Mar. 3, 1876, a direct exercise of national control, yet maintained, and requested by the State, by Resolution of Feb. 16, 1871. This railroad, although its work of construc2. But when the State, proceeding in the execution has progressed is not yet completed.. If a railroad company, and it had perfected its title not fully completed at the time named, the

1. Where the United States granted lands to a State to aid in the construction of railroads and the State accepted the grant, it could not tax the nor while it held them as the trustee of the United

lands while the title remained in the United States,

States.

tion of the trust, had transferred its entire title to

NOTE.-Exemption from taxation; whether a contract or not; not implied.

A statute exempting from taxation the property which should thereafter be given for the support of the ministry of the gospel, is in the nature of a contract, which the State cannot rescind or impair. Atwater v. Inhab. of Woodbridge, 6 Conn., 223, 16 Am. Dec., 46; Parker v. Redfield, 10 Conn., 495; Osborne v. Humphrey, 7 Conn., 339; Landon v. Litchfield, 11 Conn., 260.

These decisions were re-examined, and it was decided: 1. If the contract was with the grantor, the grantee was not privy to it. 2. If the contract

was with the grantee, there was no consideration for it.

3.

That the exemption was a mere gratuity, and is not a contract. Lord v. Town of Litchfield, 36 Conn., 118, 4 Am. Rep., 41; First Eccl. Soc. of Hartford v. Hartford, 38 Conn., 286.

The Legislature passed an Act exempting from taxation all property used for the purpose of manufacturing salt, and offering a bounty of ten cents per bushel for salt manufactured in the State. Two years later, the Act was amended by limiting the It was exemption from taxation to five years. held that the Act was not in the nature of a contract, and could be amended or repealed at any time. East Saginaw Mfg. Co. v. City of East Saginaw, 19 Mich., 259, 2 Am. Rep., 82.

lands to which the right to sell shall not then | N. S., 337; Atty. Gen. v. Carlisle, 2 Sim., 437; have attached revert. Atty. Gen. v. Shrewsbury, 6 Beav., 220; Hill, Trusts, 453.

In Atty. Gen. v. Heelis, 2 Sim. & St., 67-76, Sir J. Leach, V. C., said that the funds sup plied from the gift of the Crown, or from the gift of the Legislature, or from private gift, are charitable funds, to be administered by courts of equity. And it is not material that the particular public service is not expressed in the Statute of Elizabeth, if it come within the equity of the statute.

These provisions show that Congress intended to grant the lands to the State, neither in independent ownership, nor for the sole benefit of the State, but in trust to secure the building of railroads which would open the public lands to market, give the govern- or for any legal purpose or general purpose, ment improved transportation and mail facilities, and promote settlement and development. The grant, then, was conditional, on the execution of certain trusts of benefit to the grantor and of joint benefit to the grantor and grantee, with a reserved right of reversion in a certain event. This, of necessity, implies an interest in the United States until the conditions of the grant are completely fulfilled. Taxation is a sovereign power which cannot co-exist with this higher interest in the United States, and can only attach when that interest is finally extinguished.

Taxation is a direct method of defeating the trust, since it involves the power of sale for non-payment of taxes, which, if the taxes be valid, sweeps away all prior titles and trusts. Rice v. Railroad Co., 1 Black, 378, 17 L. ed. 153; Ill. Cent. R. Co. v. McLean Co., 17 Ill., 291; People v. Auditor-Gen., 7 Mich., 84; see also Kansas Indians, 5 Wall., 737, 18 L. ed. 667; New York Indians, 5 Wall., 761, 18 L. ed. 708; Railway Co. v. Prescott, 16 Wall., 603, 21 L. ed. 373.

Although we do not assert that this trust to a State is a charity, under the Statute of 43 Eliz., ch. 4, we claim that it is of the class of trusts enumerated in the preamble of that statute, as charitable uses, and should be treated in equity on the same principle.

Among the uses enumerated in the preamble to the statute, are gifts, etc., for schools of learning, free schools, repairs of bridges, forts, causeways, sea-banks, highways, etc. Gifts for promoting public works for the convenience or benefit of the public are considered as charitable uses.

Howse v. Chapman, 44 Ves., 542; Atty. Gen. v. Brown, 1 Swanst., 265; Atty. Gen. v. Heelis, 2 S. & St., 67; Atty. Gen. v. Dublin, 1 Bligh.,

If an exemption from taxation exists, it must be the result of a deliberate intention to relinquish this prerogative of sovereignty. distinctly manifested. Baston Bk. v. Com., 10 Pa. St., 450; People v. Mayor, etc., of N. Y., 32 Barb., 113; Ill. & Mich., Can. Co. v. C. & R. I. R. R. Co., 14 Ill., 321.

The imposition, modification and removal of taxes and the exemption of property from such burdens, is an ordinary exercise of the power of state sovereignty. There is no pledge, unless clearly expressed, that the power of taxation will not be exercised. Exemption from taxation should never be assumed unless the language used is too plain to admit of doubt. Gilman v. Sheboygan, 17 L. ed. U. S., 305; Ohio L. Ins. & T. Co. v. Debolt, 16 How. 435, 14 L. ed. 997.

No surrender of the general power of taxation by any legislative Act can be implied. Erie R. Co. v. Com., 66 Pa. St., 84; 5 Am. Rep., 351.

Exemption from taxation exists from the favor and may be revoked at the pleasure of the sovereign. Christ's Ch. v. Phila., 16 L. ed. U. S. 602.

A State may irrevocably limit itself to a particular rate of taxation only. Gordon v. Appeal Tax Court, 3 How. 133, 11 L. ed. 529; Piqua Bank v. Knoop, 16 How., 369, 14 L. ed. 977; Dodge v. Woolsey, 15 L. ed. U. S. 401; M. & T. Bk. v. Thomas, 15 L. ed. U. S. 460.

Fixing a rate of taxation by a State on granting a franchise to a foreign corporation, does not, of itself, preclude a right of further taxation by the same State. Erie R. R. Co. v. Penna., ante, 595. Remission of a tax by a vote of a town is, in sub

In Witman v. Lex, 17 Serg. & R., 90, Ch. J. Gibson says that, although the Statute of Elizabeth is not in force, yet the principles which chancery has adopted in the application of the statute to particular cases obtain here as part of the common law. And he adds: "Not founding our jurisdiction on the statute, wo are not bound, like the English courts, to restrain it in cases specifically enumerated in the preamble."

If the particular charitable purposes be clearly defined by the trust, they must be strictly carried out by the trustee, and any application of the property to a different object will be held a breach of trust.

Hill, Trust., 466.

The State, as trustee of the United States retained and, as to roads yet uncompleted or yet unpaid for, of which the Flint and Pére Marquette Railroad is one, still retains an interest in and supervision and control over the lands yet unsold, which are essential until the trust is finally executed by the sale of the lands and the application of their proceeds in payment of the cost of construction; and this interest and control utterly negative any right to tax them as lands in private ownerships are taxed.

1. By the Act of Congress of June 3, 1856, the grant was to the State and was to be held by it.

2. By the Act of Feb. 14, 1857, the State accepted the grant and assumed control of the land. Although it therein granted and conferred them upon the railroad companies, it stance and effect, the same as a gift, and a stat ute authorizing it is void. Brewer Brick Co. v. Inhab. of Brewer, 62 Me., 62, 16 Am. Rep., 395.

A limited exemption from taxation as a reward for certain services in the militia, is not an irrevocable contract, but a mere act of ordinary legisla tion, subject to future amendment or repeal, and not a private contract between the citizen and the State. The People v. Roper, 35 N. Y., 629.

A contract by a State to give up its power to tax any property within it, can be made out only by words which show clearly and unequivocally an intention to make such a contract. Northern Mo. R. R. Co. v. Maguire, ante, 287.

An Act of the Legislature exempting the prop erty of a railroad from taxation, is not a contract to exempt it unless there be a consideration for the Act. West Wis. R. R. Co. v. Supervisors, 93 U. S., 595, 23 L. ed. 814.

Immunity from taxation is a personal privilege, and is not transferred by a sale of a railroad and Its franchises under a mortgage or judgment. Morgan v. La. 93 U. S., 217, 23 L. ed. 860.

It is competent for a State Legislature to grant, by statute or charter, an irrepealable contract for exemption from taxes. New Jersey v. Yard, 95 U. S., 104, 24 L. ed. 352.

The intention of the Legislature to exempt the property of corporations from taxation, cannot be inferred from ambiguous terms. If a doubt arise, it must be solved in favor of the State. Hoge v. R. R. Co., 99 U. S. 348, 25 L. ed. 303. Power of state legislature to exempt from taza tion-see note, 19 L. R. A. 77.

was yet subject to the direction of the Board | probably have remained still longer exempt of Control created by the Act, and subject to as an unsold part of the national domain. 3. the supervision needful to enforce the trust. All the conditions of the Act of Congress are carefully re-enacted and others added.

These and other provisions show conclusively that the State reserves to itself, as trustee, the right to control the disposition and sale of the lands.

Repeated amendments to this Act, providing for the disposal of the lands, prove that this control was maintained, and that only when the lands are finally sold will the State relinquish its supervisory trust over them.

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Nor is the State's relation changed by the fact that, as its agent, the company pledges or sells them for its own benefit. But this fact creates a confusion of ideas, from which grows the claim to tax them. If it had itself managed and disposed of these lands, no prejudice against corporations could have blinded it to the absurdity of taxing them, and so subjecting them to the risk of sale for taxes. In that case, duty to the trust would have compelled it to redeem them itself. Is that duty less plain because it permitted the company to act as its agent?

If these taxes be valid, it results that the State, by imposing them, withdraws to its own Treasury part of the means intrusted to it, "exclusively" to construct the road and, for this small amount, risks the loss of the whole fund by a sale for taxes.

Under the Act of 1857, the State might have disposed of them by its Board of Control, and if it chose to remit the duty of sale to the Company, as its agent, the delay, if there be any, is its delay, of which it cannot complain or avail itself to the prejudice of the Company or its creditors.

But the conclusive reason why the State cannot yet tax these lands is, that Congress having granted them on certain trusts, one of which is that they be exclusively applied to build the roads, which necessarily involves the payment of the cost thereof out of their proceeds, they must be exempt until that trust is executed by payment of the cost of construction out of the proceeds of their sale.

1. That payment of the cost of construction out of the proceeds of the land is a necessary part of the trust which the State must see fulfilled before its relation of trustee ceases, is the only construction consistent with the due execution of the trust, and with the honor and good faith of the United States and the State. It is, of necessity, involved in the relation of trustee. The trust is for the benefit of the company who constructs, and that of the creditors who furnish the means on the faith that the lands will be honestly preserved as their security. They are the true cestuis que trust. This was the view taken in Denniston v. Unknown Owners, supra, a case in its facts closely and, in principle, exactly like this.

That the State bears this relation to the lands; that it is a relation inconsistent with 2. The mortgage and trust deeds of 1866 the exercise of the taxing power; and that the and 1868 do not amount to a sale of the lands, fact that the Company was authorized to sell nor make the creditors they secure, purchasers. the lands made it the agent of the State, is The title to the lands is not in them. It is shown by Denniston v. Unknown Owners, 29 where the Acts of Congress and the State have Wis., 351, which was a bill filed by the plain-placed it, viz.: partly in the State, in trust, tiff to quiet his title to about 7,000 acres of land which had been taxed, sold and conveyed by the State to him. The lands were part of the Fox and Wisconsin River grants, and had been transferred by the State to the Fox and Wisconsin Improvement Company, or to trustees for its use, and that company was to make the improvement. It was held by the court that the Improvement Company became agent of the State to improve the rivers, and that the title of the State was not so far devested as to render the lands taxable while the title remained in the trustees.

See, also, Ill. Cent. R. Co. v. McLean Co., 17 Ill., 291; Atkins v. Hinman, 2 Gilm., 449 (7 Ill.); People v. Aud-Gen., 7 Mich., 84; Rice v. Railroad Co., 1 Black, 378, 17 L. ed. 153, and cases supra.

The State itself did not consider these lands part of its taxable domain. It taxes them by special legislation. If its trust had ceased and the land had become merged in private ownership on the construction of the roads, before their actual sale, no special Act was necessary to subject them to taxation. They must, by the mere fact of construction, have become subject to the operation of the general tax laws.

If it be said that the lands remain too long exempt from taxation, we answer: 1. They are already bearing the burden of taxation indirectly, by the specific railroad tax hereafter noticed. 2. If Congress had not chosen to grant them for railroad purposes, they would

to see that the conditions of the grant are performed, with a right of reversion in the United States until those conditions are completely performed, and a beneficial interest in the company which will draw to it both these conditional interests when the road shall have been completed and paid for out of the lands, as to all lands left unsold after it is so paid for. As to lands sold under the power of sale in the mortgages, these interests become merged in the purchaser, who thus acquires a perfect title, and then the State's right to tax accrues.

As to the residue of unsold lands, if there be any, a perfect title will vest in the railroad company by merger of the United States and State trust interests, respectively, only when the cost of construction is completely paid. Then the liability of such unsold residue to taxation will stand on a different footing. But in no aspect can the bond holders be treated as purchasers, or their mortgages as deeds of sale.

It is well settled that a power of sale can be exercised only in the mode, and subject to the conditions prescribed in the instrument creating the power.

Wright v. Wakeford, 17 Ves., 434; Blacklow v. Laws, 2 Hare, 40; Hill, Trusts, 478. It is equally well settled that a power to sell is not fully executed by a mortgage.

In Perkins v. Walker, 1 Vern., 97, and Thorne v. Thorne, 1 Vern., 141, cited with approbation by Mr. Sugden in. his treatise on powers, it is ruled that if a man have a general

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