or operated "as to prevent any obnoxious smells or gases," or whether, in the operation of said works, any smoke or soot had been emitted therefrom so as to constitute a nuisance. Surely, there is nothing in the facts of this case, nor in any well-settled principle of law applicable to such facts, that will authorize this court to determine these questions in a collateral proceeding.

It is contended that the right and privilege claimed by appellee does not prohibit the removal of house refuse and garbage beyond the territorial limits of the municipality; that the only privilege granted is that all house refuse and garbage disposed of within the city should be delivered to the crematory. This position cannot be maintained. In order to ascertain the true intent and meaning of the board of supervisors in passing Order No. 2,965, all of the sections must be considered together as a whole, and the object and purposes of passing the order must also be considered. A broad and liberal construction should always be given to acts and ordinances of this character in order to carry out their provisions and give effect to the intention of the parties, and to secure and make effective the object to be accomplished thereby. The language used in the order, interpreted in the light of these considerations, is not susceptible of the narrow and technical construction sought to be placed upon it by appellants. We have not deemed it necessary to quote the entire order. It has already been sufficiently referred to. Its preamble declares the necessity, and gives reasons why the sole right and privilege to cremate garbage, etc., should be given. Section I confers upon Sharon and his assigns the sole and exclusive right and privilege to cremate and destroy "within the city" the refuse therein named, and to charge and collect the amount named therefor at the crematory or reduction plant. The words "within the city and county," as used in the order, have reference to the right to build the crematory within the city and county, and cannot fairly be construed as reserving the right and privilege to others to remove and dispose of the garbage "without the city and county." The order of the board should, like the provisions of a statute, receive a sensible construction, and should not be interpreted so as to lead to an absurdity. The reason of the law in such cases should prevail over its strict letter. Tsoi Sim v. United States, 116 Fed. 920, 926, 54 C. C. A. 154, and authorities there cited. How could the order which gives "the sole right and privilege" to cremate all the garbage, etc., within the city be construed as allowing rival parties to destroy the privilege thus granted by gathering the garbage and transporting it without the city? Can it sensibly be said that such was the intention of the board in passing the order?

In the light of the conclusions reached upon this point, it becomes unnecessary to discuss the provisions of Order No. 12, which more clearly expresses the intention of the board upon this subject. The decree of the Circuit Court is affirmed.

FARMERS' LOAN & TRUST CO. v. DENVER, L. & G. R. CO. et al.
HUTCHISON v. FARMERS' LOAN & TRUST CO.

(Circuit Court of Appeals, Eighth Circuit. November 23, 1903.)
Nos. 1,810, 1,815.

1. MORTGAGES-SUPERIORITY IN EQUITY-SUBSEQUENT MORTGAGE OF LEGAL TITLE TO PAY PURCHASE PRICE.

The mortgagee under the after-acquired property clause in a prior mortgage of an equitable title to land, which is subject to the condition that the mortgagor shall pay that portion of the unpaid purchase price which the purchaser of the legal title owes, before divesting him thereof, may not enforce a conveyance of the legal title, or subject to his mortgage a subsequent mortgage of that title to another for the purpose of securing the payment of a loan, a portion of the proceeds of which was applied to the payment of the unpaid part of the purchase price of the land, except upon condition that there shall be repaid to the subsequent mortgagee, out of the proceeds of the sale of the property or otherwise, the moneys which were taken from the proceeds of his loan and applied to the payment of the debt for the purchase price.

S. SAME-TAXES.

The decree for the first mortgagee must also be conditioned with the repayment to the second mortgagee of the taxes upon the property which the latter has paid during the existence of his claim.

8. SAME-FUTURE-ACQUIRED Property-INTEREST COVered.

A mortgage of future-acquired property attaches to the interest obtained by the mortgagor only, and is inferior to junior liens, incumbrances, and equities under which the property comes to the mortgagor. 4. CROSS-BILL-REQUISITE TO AFFIRMATive Relief.

The general rule is that no affirmative relief can be granted to a defendant in equity in the absence of a cross-bill which prays for it.

5. SAME EXCEPTION-SUCH BILL NOT REQUISITE TO COMPEL ONE WHO ASKS EQUITY TO DO EQUITY.

There is an exception to the rule.

It is that no cross-bill is necessary to enable a court of equity to grant any relief to a defendant, affirmative or otherwise, which the principle that he who asks equity must do equity requires the court to impose upon the complainant as a condition of granting to him all or a part of the relief which he seeks at its hands.

6. EQUITY LIMITATIONS-RIGHT OF DEFENDANT TO EQUITABLE RELIEF.

A court of chancery may, in a case in which the rules and principles of equity demand it, condition its grant of relief sought by a complainant with the enforcement of a claim or equity held by a defendant, which, by reason of the statute of limitations or otherwise, the latter could not enforce in any other way.

7. SAME-LACHES.

One who has the legal title, or a parmount lien upon it, is not guilty of laches which will prevent him from asserting his equities therein in defense of a suit in chancery to deprive him of his title or lien, by the fact that he did not institute any suit or take any affirmative action to foreclose or avoid the equities of the complainant. It is time enough for him to present his equities when his legal title is assailed in a court of chancery.

(Syllabus by the Court.)

Appeals from the Circuit Court of the United States for the District of Colorado.

These are appeals from a decree of foreclosure of a trust deed, which will hereafter be called a "mortgage," made by the Denver, Lakewood & Golden 14. See Equity, vol. 19, Cent. Dig. § 450.

Railroad Company on November 1, 1890, to the Farmers' Loan & Trust Company, as trustee, to secure the payment of bonds to the amount of $627,000. The subject of the controversy is seven acres of land in the city of Denver, which was not owned by the railroad company when the mortgage was given, but which the trust company prayed the court to subject to the lien of its mortgage under the usual subsequently acquired property clause which was contained in that instrument. The defendant James R. Hutchison, who claimed under a trust deed upon these seven acres, dated February 1, 1894, hereafter termed the "Hutchison Mortgage," made to secure a note for $50,000 signed by the railroad company and the Jefferson Investment Company, payable to him, answered that his equity was superior to that of the trustee of the first mortgage; and the court conditioned the decree of the complainant with a sale of the seven acres separate from the other property of the railroad company covered by the first mortgage, and the payment out of the proceeds of that sale of $21,049 and interest from February 1, 1894, to the defendant Hutchison. The trust company appealed from this decree because it was conditioned with the payment of anything to Hutchison out of the proceeds of the sale of the land, and Hutchison appealed because it was not conditioned with the payment of $6,279.62 more.

Samuel Newhouse was one of the largest bondholders and stockholders of the railroad company. After that company had given and recorded its first mortgage, and about March 30, 1891, he purchased the seven acres in controversy, which will hereafter be termed the "Shop Tract," from Nathan Baker, the owner, for $52,250, paid him $5,000 in cash, and gave his notes for $47,250, which he secured by a trust deed of the land to one Wood for the benefit of Baker. Newhouse bought this land for a yard for the railroad company under an agreement with it that the title to the property should be held by him, or by a company organized to hold it and empowered to give mortgages upon it, until the railroad company paid all the moneys expended or promised to be expended for the property, and that then the railroad company should be entitled to the title. For the purpose of holding the title to the property, the Jefferson Investment Company, a corporation, was formed in June, 1891; and Newhouse conveyed the shop tract to that company, subject to the deed of trust to Wood, and that company assumed the debt secured by that deed. In the summer of 1891 the railroad company took possession of the land, erected a roundhouse and laid some tracks upon it, and continued in the occupation of the premises until a receiver was appointed in this suit, on July 31, 1896. In December, 1893, the railroad company had paid back to Newhouse the amount he had expended for the purchase of the property, and had made some payments upon his indebtedness to Baker; but there still remained due to Baker $25,849, and the company had no means to pay this or any of its other indebtedness. Baker gave notice that he would foreclose his mortgage unless the indebtedness of Newhouse to him was paid. Thereupon the railroad company and the investment company employed Newhouse to go to London to procure for them a loan of $50,000, and authorized him to offer as security for the repayment of the money a trust deed of the shop tract made by the investment company, which held the title, and certain bonds and stock as collateral security, which were of so little value that they are of no importance in this case, and will not be farther noticed. He proceeded to London, and applied to the defendant Hutchison for this loan. He informed Hutchison that he represented the railroad company and the investment company; that they were in great need of money, and would lose the title to this tract of land by the foreclosure of the Baker mortgage unless he could procure the loan; and, to secure the repayment of the loan, he agreed with Hutchison, as their agent, that he should have a first mortgage on the shop tract, and should be put in the place of Baker, who then held the superior security. Hutchison accepted this offer and agreement, and loaned the money on condition that Newhouse would see that he obtained the security. Newhouse returned to Denver; the railroad company and the investment company made a note for $50,000, payable to the order of Hutchison; the investment company made a trust deed to Newhouse of the shop tract to secure the note; the Baker mortgage was released; and Hutchison paid over the $50,000. This payment was made on February 2, 1894. On

that day there was due upon the mortgage to Baker $25,849. $21,049 of the money received from Hutchison was on that day paid to the First National Bank in part payment of the notes held by Baker, and $4,800 of his money was paid to six directors of the railroad company for certain bonds which Baker had agreed to accept, and did accept on that day, in payment of the balance owing upon the mortgage to him. The indebtedness secured by the Hutchison mortgage was not paid. Hutchison caused it to be foreclosed, and on October 19, 1897, at the trustee's sale, he bid it in for $40,000, and received a trustee's deed of the premises in question under it. The various mortgages and instruments affecting title to which reference has been made were recorded at about the times they were respectively made.

On July 29, 1896, the Farmers' Loan & Trust Company exhibited its bill in the court below to foreclose the mortgage of November 1, 1890; but it made no one party defendant but the railroad company, and did not ask for any special relief in reference to the tract of land here in question. On November 30, 1898, it filed an amendment and addition to its bill, in which it recited the transactions relative to this tract of land; prayed that the Jefferson Company, Newhouse, the trustee, and Hutchison be made parties defendant, and that its mortgage of November 1, 1890, be declared to constitute a lien upon the shop tract superior to any right, title, or lien of these proposed defendants therein or thereon. The Jefferson Company and Newhouse appeared as defendants, but made no serious contest, and decrees pro confesso were taken against them. After Hutchison had demurred to the amended bill, and after his demurrer had been overruled, he answered on February 15, 1901, and by an amendment filed July 22, 1901, that he made the loan of the $50,000 to take up and pay the purchase-money notes of Newhouse to Baker, and to prevent the impending foreclosure of the mortgage to the latter under an agreement with the Jefferson Company and the railroad company that he should have a first mortgage upon the shop tract, that $25,849 of the money which the railroad company obtained from him by this loan was used to pay the notes to Baker, and that the trust deed to Wood was released for the purpose of executing this agreement. He also set forth the fact that he had paid the taxes levied upon this property for many years, which amounted in the aggregate to about $1,500. Upon this state of facts, the court below rendered the decree which is challenged by the appeals which are now to be considered.

Charles W. Waterman and Thomas J. Leftwich (Edward O. Wolcott, Joel F. Vaile, Herbert B. Turner, Louis B. Rolston, and James F. Horan, on the brief), for Farmers' Loan & Trust Co.

C. C. Parsons and Stuart D. Walling, for James R. Hutchison. Before SANBORN and VAN DEVANTER, Circuit Judges, and HOOK, District Judge.

SANBORN, Circuit Judge, after stating the case as above, delivered the opinion of the court.

On February 2, 1894, the Jefferson Investment Company held the legal title to the land here in controversy in trust (1) to pay $25,849, the unpaid part of its purchase price then evidenced by the notes and mortgage to Baker, and all moneys expended for the property; and (2) upon the repayment of these amounts by the railroad company to convey the property to that corporation.

The Farmers' Loan & Trust Company, under the after-acquired property clause of its deed of trust of 1890, had a lien upon the equitable title of the railroad company. It had a lien upon the right of the railroad company to pay the $25,849 owing for the land, and any other moneys expended for it, and to acquire the property by means of that payment, but it had nothing more. In reliance upon

the trust deed of the investment company, the corporation which held. the legal title, and upon the representation of that company and of the railroad company by their agent, Newhouse, who negotiated and procured the loan from him, that these corporations needed his moneys. to save the property from the foreclosure of the mortgage to Baker, Hutchison loaned them $50,000. At least $21,049 of the money obtained by this loan was used to pay the notes of Baker, and to procure a release of his mortgage for the purchase price. The Farmers' Loan & Trust Company brought Hutchison into the court below, and besought that court to adjudge that the bondholders whom it represents have the paramount lien upon this land, that this tract shall be sold under the direction of the court, and that all its proceeds shall be applied to the payment of the bonds secured by the mortgage of 1890, so that neither Hutchison, whose money paid the unpaid portion. of the purchase price owing to Baker, nor the investment company, which obligated itself to repay it to him, shall have any security or derive any benefit from the land which the money of the one and the obligation and mortgage of the other saved from the foreclosure of the mortgage to Baker. The circuit court granted the prayer of the trust company that the land should be sold, but it conditioned this grant of relief with a provision that out of the proceeds of the sale Hutchison should first be paid the $21,049 which had been paid upon the debt for the purchase price out of the moneys which he loaned to the investment company and the railroad company.

This decree does not impress one at first blush as either unjust or inequitable. Neither the Farmers' Loan & Trust Company nor the bondholders paid any consideration for, or loaned any money upon the faith of, the tract of land here in question. This land was acquired by Newhouse and the investment company after all the bonds had been issued except those which were subsequently taken by Newhouse when he had complete knowledge of all the legal and equitable rights of the parties. The mortgage to Baker to secure the payment of a part of the purchase price was superior, in law and in equity, to the mortgage to the trust company. The latter attached to nothing but the equitable estate of the railroad company, and it was a condition precedent to the acquisition of the title by that company that it should pay the moneys expended for the property and the unpaid part of the purchase price. A mortgage of future-acquired property attaches to the interest obtained by the mortgagor only, and is inferior to junior liens, incumbrances, or equities under which the property comes to the mortgagor. U. S. v. New Orleans & Ohio Railroad, 12 Wall. 362, 20 L. Ed. 434; Central Trust Co. v. Kneeland, 138 U. S. 414, 423, II Sup. Ct. 357, 34 L. Ed. 1014. Why may not Hutchison, who holds the first mortgage upon the legal title, insist that the moneys taken from the proceeds of his loan, and applied to the payment of a part of the purchase price of the property, shall be repaid to him before his mortgage is subjected to the after-acquired property clause of the prior mortgage to the complainant? Counsel for the trust company urge many reasons why, in their opinion, the court could not lawfully impose such a condition, and why, in their judgment, the decree below is erroneous.

126 F.-4