road Company for the security of the purchase price remaining unpaid to the Ohio court, which the court below should have enforced for the benefit of the holders of these receiver's certificates. The decree under which the common pleas court sold the property, now constituting the property of the Railroad Company in custody of the court below, provided that the minimum bid received should be $1,500,000; that the purchaser should pay to the commissioner $5,000 in money, and deposit with him $500,000 in first lien divisional mortgage bonds, or an equal amount in cash; and that the purchaser should pay such further amounts in cash, "or shall secure the same to be paid in a manner satisfactory to the court, at such times as the court may order for the payment of any and all such liens as hereafter may be found to take precedence and have priority over the liens of the several mortgages set forth in the petition herein." It further provided that:

"After the payment of such prior liens, the remaining amount of the proceeds of sale may be paid to said master, either in cash or bonds or coupons, at such distributive share as may hereafter, by the court, be determined."

It was evidently contemplated that the bondholders would, in their own interest, become the purchasers of the property. In that event it would only be necessary that cash enough should be paid into the registry of the court to pay expenses of foreclosure and such claims as should, in that cause, be decreed to be claims entitled to payment in preference to the foreclosed mortgage debts. These debts of the receiver were of that class, for the decree allowing the receiver to create them expressly declared that they should be paid next after the costs of the proceeding. Prior to the sale a special master had been appointed to take proof and report what debts existed to be paid in preference to the mortgage debts. This report had not been made when the sale came on to be confirmed, and no such report has ever been made to that court. The property was sold and bid in by G. W. Sinks and D. B. Hatch, as trustees for the mortgagees and stockholders of the bankrupt company, they having united in a plan for the acquisition of the property by a new company. Their bid was $1,500,500. They paid $5,000 in cash and "deposited" $500,000 in first lien foreclosed bonds. Having agreed to pay $1,500,500 for the property, it was manifestly within the power of the Ohio court, under the decree of sale, to require, if so much should be needed to pay off preferential debts,-including certificates issued by the receiver,the payment of the whole of this sum. Pending the ascertainment of the preferential claims it was competent for the Ohio court to refuse confirmation until the amount to be paid in cash had been fixed and paid in, or to have confirmed the sale subject to a lien for the unpaid purchase money, or to have confirmed the sale and withheld a conveyance until the purchase money was paid, or to have made a conveyance reserving a lien or right to retake and resell in default of payment, when ordered. None of these things were done. The sale was confirmed. The commissioner was ordered to make a conveyance in fee simple, and "that the purchasers be, and they are hereby, subrogated for the protection of their title to all rights in said premises that belong to holders of such liens or claims as may

have been, or may be hereafter adjudged in this action to be, entitled to payment out of the proceeds of the sale of said mortgaged premises." The decree of confirmation, after reciting that the amount and ownership of claims entitled to be paid out of proceeds of sale before the mortgagees had not been ascertained, orders "that all questions in regard to the allowance and payment of the same be reserved for the further order of the court." Thus we find that the sale was confirmed, and the title in "fee simple" vested in the purchaser, without the reservation of any lien or right to retake and resell, although practically the entire purchase money remained unpaid. If the matter had stopped here, there would be strong ground for the insistence that an implied equitable lien would exist, which the common pleas court might have enforced against the purchasers and all who acquired title with notice that the purchase money was unpaid. But the decree did not stop there. The court and the counsel controlling the sale seemed to realize that some security ought to be exacted. The confirmation decree then proceeds as follows:

"Ordered that, in order to secure the payment of the claims in the preceding paragraph mentioned when such payment shall be directed by the court herein, said purchasers or their assigns, within ten (10) days from the entry of this decree, and simultaneously with the delivery to them of the deed to the mortgaged premises, file with the clerk of this court mortgage bonds, or, pending the engraving of said bonds, bond scrip, representing and exchangeable for bonds when they shall have been engraved. Said bonds shall be secured by a first mortgage on all the property herein described, and shall amount, in the aggregate, to $800,000, and shall constitute not less than two-fifths (%) of the entire issue of said first mortgage bonds, and shall bear interest at the rate of 5 per centum per annum from November 1, 1895. The said bonds shall be held by said clerk as security for the payment out of the proceeds of said sale, and by the purchasers of said property or their assigns, of such claims as may be ordered to be paid by this court prior to the payment of the bonds issued under the mortgages described in the petition, and especially, and in the first instance, for the payment of the excess of all costs, including allowances for counsel and to said receiver and expenses of this suit over and above the sum of five thousand dollars ($5,000) paid to said special master commissioner, hereinafter mentioned, if there shall be any such excess. And it is further ordered that, after the payment and satisfaction of all of said prior liens and claims, to be evidenced by the production to the clerk of this court of receipts from the owners of said claims, or cash, as the case may be, under and in accordance with the orders of this court, the persons who shall have deposited said bonds with the clerk aforesaid, or their assigns, may withdraw the same from his custody: provided, however, that the depositors of said bonds, or their assigns, may at any time, upon payment in cash, or upon presenting to the said clerk receipt as above provided, withdraw bonds so deposited at the rate of ninety per centum (90 per cent.) of their face value; that is, for every one thousand dollars ($1,000) so paid, nine hundred dollars ($900) in bonds may be withdrawn. And it is further ordered that the balance of said purchase money in excess of the prior liens above mentioned and the costs herein shall be paid to said clerk either in cash or bonds or coupons, secured by the mortgages in the petition described, in accordance with the priority of the lien securing such bonds and coupons as heretofore determined, said bonds and coupons being, respectively, receivable in payment of purchase price of said property for an amount equal to the distributive share which the holders of each of said bonds and coupons shall be entitled to receive, as said share shall hereafter be found by the court: provided, that such payment, either in bonds, coupons, or cash, shall be so made within sixty (60) days from the date of this order."

In pursuance of the authority conferred by this decree, a mortgage was made, simultaneously with the delivery of the master's deed, by the Railroad Company, "the assign" of Sinks and Hatch, securing an issue of $2,000,000 of 5 per cent. first mortgage gold bonds. Scrip, redeemable in bonds when engraved, to the extent of $800,000, was deposited with the clerk of the common pleas court. Bonds to redeem this scrip were placed in the possession of Sinks and Hatch, who now hold same, never having taken up the scrip in the hands of the common pleas clerk. Upon these facts we are unable to escape the conviction that the common pleas court intended to rely upon these bonds and the personal credit of the Railroad Company for the security of the receiver's certificates and other claims entitled to preference out of the proceeds of sale. That the court consented to the execution of "a first mortgage" for $2,000,000 by the purchaser is plain. That neither an express lien is reserved, nor jurisdiction to retake and resell the property for default in payment of deferred purchase money, is of no great importance, for it may be conceded that, unless relinquished, an implied lien in the nature of a vendor's lien would arise, and that the inherent powers of a court of general equitable jurisdiction would authorize it to enforce such implied lien by appropriate proceedings in the cause in which the sale was made. That any implied lien which might arise ordinarily to secure unpaid purchase money due under a judicial sale was intentionally relinquished in this instance, we entertain no doubt. To the fact that the court ordered a deed, vesting the title in fee simple, and that the purchaser should go at once into possession, and that for the protec tion of the title thus acquired they should be subrogated to the titles and liens of the holders of such liens before the court, we must add the pregnant circumstance that the court, for the express purpose of protecting such creditors as should be found entitled to preference over the mortgagees, exacted from the purchaser a particular security for the payment of the purchase price to the extent of $800,000. This security the court set apart for the benefit of preferential creditors, including therein, as the circuit court held, the holders of receiver's certificates. This security for the payment of the purchase price amply provided for the payment of so much thereof as then seemed sufficient to pay off receiver's debts and any other preferential claims not discharged by the proper application of the receiver's certificates. When we say that $800,000, secured by a first mortgage, seemed to afford an ample security for the payment into court of such part of the purchase price as should be necessary to pay off the claims entitled to be paid out of the proceeds of sale in preference to the mortgage debts, we include only preferential debts of the character which the receiver was authorized to pay out of the proceeds of his certificates, and do not include floating debts not paramount in equity to the mortgage debts, nor "car-trust" obligations, except in so far as the receiver was authorized to pay those matured, or about to mature, to save forfeiture of the equipment against which only were they a lien. But for the subsequent mistake of turning over to the Railroad Company, as assignee of the purchasers, $300,000 in receiver's assets, including over $150,000 in cash arising

from receiver's certificates, upon the theory that the purchaser had assumed the receiver's debts and all preferential liabilities, the security exacted by the court for the payment of purchase money would have been ample. The receiver and the complainant should have interposed, and applied these assets to the payment of preferred obligations. But the receiver had then become the president of the purchasing company, and had a degree of confidence in the sufficiency of its assumption of his debts, as well as of the debts otherwise preferential, not justified by the facts. The acquiescence of the Metropolitan Trust Company in this disposition of receiver's assets is more difficult to understand. What we have said as to the reasonableness of the security contracted for by the court is only significant as aiding us in understanding the intent of the court in the matter of retaining or relinquishing its equitable lien for the security of the purchase money. Was the particular security exacted from the purchasers consistent with the existence of a lien which was secret and yet paramount? Such a course was utterly repugnant to the retention of such a lien, and consistent only with an intention to rely upon the bonds to be deposited and the personal credit of the Railroad Company. Neither was this mortgage to be limited to securing only the 800 bonds to be deposited. By the express terms of the decree the bonds might be part of an issue not exceeding 2,000, secured by a first mortgage. The precise security which the court contracted for was given, and that security is inconsistent with the existence of any lien superior to it.

A first mortgage, upon these facts, implied a first lien, and every one looking to the title and acquainted with the history of that title had a right to believe that no implied vendors' lien was retained, and to accept bonds of any series thereafter issued in full reliance upon the freedom of the title from any secret lien. The relinquishment of the implied lien of a vendor has been inferred under circumstances less forceable than those here existing. In re Brentwood Brick & Coal Co., 4 Ch. Div. (1876) 562, is much in point. The owner of a brickyard and plant conveyed it to a corporation formed for the purpose of acquiring and operating it. The consideration for the transfer was £8,000; £2,000 to be paid in shares of the company, and £6,000 to be paid as follows: 50 per cent. of all sums of money received by the company or to be received by the company on the sale of shares, and the like sum of 50 per cent. upon all money by way of capital borrowed by the company until the payments so made should amount to the purchase price. The company sold no shares and borrowed no money, and proved abortive. The vendor asserted a vendor's lien, which was denied him. James, L. J., said:

"The case of the appellant may be a hard one, but the nature of the transaction excludes vendor's lien. This is not the case of a simple agreement to sell for £6,000. No doubt the vendor got a higher price by agreeing to accept payment in the way he did, and taking his chance of capital being subscribed or capital being borrowed to an amount to pay him. He says, in fact, 'Half of the first capital moneys that come in to the extent of £6,000 is to be my purchase money.' No day for payment was named. He agreed to receive his purchase money if and when capital should come in. He got for his property a charge upon and a right to the capital of the company to the extent of £6,000 when it came in. To my mind, it is clear that he in

tended to rely on that fund for payment, and intended that the company should have the means of borrowing. This is quite inconsistent with a lien which would probably make the company unable to pledge their property. I am therefore of opinion that the vice chancellor came to a correct conclusion."

Much has been said by counsel about keeping the faith of the court in respect to the priority of debts created by its authority upon the faith of the property in its custody; to all of which we fully assent. But the court must also keep good faith with all those who deal with securities or property acquired in like reliance upon the verity of the proceedings of a court of record. When rights in favor of third parties have arisen, the court, even in the enforcement of an order requiring the payment of purchase money under a judicial sale, should only exercise its authority in the enforcement of such order consistently with such rights. If the receiver, or others responsible for the management of the original foreclosure cause, have sacrificed the rights of this class of creditors, which might, by a different course, have been preserved, they must look to their remedies against those guilty of neglect. Koontz v. Bank, 16 Wall. 196, 21 L. Ed. 465; Stuart v. Gay, 127 U. S. 513, 8 Sup. Ct. 1279, 32 L. Ed. 191.

All of the cases which have been cited by counsel to establish the power of a court over property sold at a judicial sale in the hands of third persons are cases where there was a distinct reservation of a lien, or a distinct reservation of a power to resell the property to compel compliance with the direction of further decrees in respect to obligations which the purchaser was bound to discharge, or cases where no intervening rights had arisen. The confirmation decree, which relinquished the vendor's lien by providing for a special security inconsistent with the retention of a vendor's lien, was entered upon the motion of the Metropolitan Trust Company, the sole complainant in the Ohio foreclosure suit. It at that very date was also the holder of $250,000 in receiver's certificates, for which it now asserts a lien, either through the lien declared when they were authorized, or through the enforcement of an implied vendor's lien. True, that company occupied two characters, it was trustee for the foreclosing mortgagees, and, in its individual capacity, was the owner of one-half the receiver's certificates. In neither character did it object to what was done, and, if others have acquired rights in reliance upon the relinquishment of the vendor's lien as a consequence of the confirmation decree, it is in no situation to complain if matters have turned out badly. F. G. Hallett is in a somewhat better plight. But he was one of the foreclosing mortgagees, and represented by his trustee. We attach but a moral importance to this. He, as the holder of certificates issued pendente lite, was privy to the cause, and affected and bound by the decree which operated to transfer the lien of his certificates to the proceeds of sale, and to relinquish the vendor's lien for the special security provided by the deposit of the mortgage bonds of the purchasers.

Another effect of the confirmation decree in providing a particular security for the payment of claims prior in rank to the mortgagees is that the receiver's certificates must stand upon an equal footing with the other preferential claims which it was the purpose