by the deposit of three of the bonds as collateral. Two of the notes have been paid and three remain unpaid. The bonds were issued on an explicit understanding that they were to be sold for cash. This is apparent from the proceedings of the company and its officers as they are exhibited in the record of the case. It is contended on the part of defendant Parks that the pledge of the bonds to Beecher was unlawful because in violation of the understanding under which they were authorized. But here again Parks attempts to make an objection which is only available to the company or its stockholders. He has purchased only the equity of redemption, and not any right the corporation or its stockholders may have had to complain of an abuse of trust on the part of the corporate officers. He is in no better position than he would be if he held by voluntary conveyance from the company; in which case it is plain that he could not make this objection. Fairfield v. McArthur 15 Gray 526; Gale v. Gould 40 Mich. 515. It would of course have been different if the transaction had at the time affected some existing right; as was the case in Van Deusen v. Frink 15 Pick. 449, and some others which are referred to in the briefs.

III. It is also urged that Beecher has been in possession of the mortgaged property as mortgagee, and has received in person or through his agent a large amount of money and other personal property which he must account for on the mortgage, and which, if accounted for, will more than extinguish the three notes which he now holds.

The facts which are supposed to give ground for this position are that in December, 1872, Beecher gave a guaranty to the Western Transportation & Coal Co. of the performance of a contract made by the Marquette & Pacific Rolling Mill Co. to deliver ten thousand tons of iron ore, and the latter company, in a contract reciting that fact, and also the indebtedness of the company to Beecher and the delivery to him of collateral bonds, stipulated with him that he should carry on the business of the company; that the proceeds to accrue from said sale of ore should be applied by Beecher or his agent

"from time to time in working the mine of said company, rebuilding its furnace and its current working capital;" and that in case "any surplus accrues in the course of the business of said company above the amount necessary to provide for working the mine of said company, rebuilding its furnace and its current working capital, such surplus may be used and applied for the payment of current indebtedness." There is nothing in this that fixes the character of Beecher's possession as that of mortgagee. He was in as contractor, and bound under his contract to account to the company. But the rents, profits or proceeds received did not apply as payment on the mortgage and could only be applied by way of set-off. No offer has been made to apply them in this suit. This disposes of the defences which are set up to the complainant's demand. The claim of White remains for examination.

IV. The claim of White arises upon the following facts: Hiram A. Burt as well as complainant was guarantor of the performance of the contract made with the Western Transportation & Coal Company as above stated. He was also indorser for the Marquette & Pacific Rolling Mill Co. on paper held by a bank of which White was president, in the amount of thirty thousand dollars. In the agreement of December, 1872, between Beecher and the Rolling Mill Co., it was agreed that the bonds for one hundred and fifty thousand dollars and the mortgage collateral thereto, should be held by the trustee for the payment of fifty thousand dollars prior mortgage and interest, and the thirty thousand dollars and interest which then remained unpaid to Beecher of his fifty thousand dollars loan to the Rolling Mill Co., and also for the full liquidation and discharge of any liabil ities of any kind to which Beecher might be subjected by reason of his guaranty of the contract with the Transportation and Coal Co. By another contract between Beecher and Burt, bearing the same date with the contract above mentioned, Burt was made agent for Beecher at the mine, and Beecher agreed that whatever was received by him under his contract with the Rolling Mill Co. should be held and controlled by him

for the protection of Burt as guarantor as aforesaid, and also to such extent as might be necessary to protect Burt for all amounts due or to become due to him from the company, and for liabilities thereafter incurred, etc. Upon the indebtedness of the company to the bank Burt was thereafter sued and judgment recovered, whereupon White assumed the indebtedness and Burt assigned to him all his rights in the contract of December, 1872, made with complainant as above stated. The board of directors of the Rolling Mill Co. formally approved of the contract between Beecher and Burt, so far as it undertook to give to Burt security, and authorized Beecher "to hold the securities therein referred to for the joint benefit of said Burt and said Beecher as therein stated."

It is contended on the part of both complainant and defendant Parks that the contracts and the action of the directors upon them do not secure Burt for pre-existing liabilities and consequently that White can claim nothing under them. We have examined the contracts with care and must admit that the construction is not free from all difficulty; but we are satisfied the intention was to give Burt full protection. There was no just reason for restricting his protection to his guaranty on the contract with the Transportation and Coal Co. and to accruing indebtedness, and it is not likely he would have been content to take security thus restricted. In the light of all the facts it seems to us apparent that the intention was Burt as well as Beecher should be protected to the full extent that whatever was pledged to Beecher could give protection.

V. Complainant, by reason of the failure to pay interest, elects to treat the principal sum represented by the bonds as now due. The mortgage gives this election to the trustee, and though he declines to foreclose, it is insisted no one else can elect for him. The point has not been discussed, and we do not pass upon it, as we conceive it to be unnecessary. The principal sum will be due before foreclosure can be completed, and an election will be of no moment.

Decree will be entered in accordance with these views.

The other Justices concurred.

THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY AND
JOHN HEBERT V. CHRISTIAN BULTE.

Agency-Ejectment against later mortgagee holding under a tax-title

Relation.

The general attorney of an Insurance Company, after foreclosing a mortgage in its name, took a tax-deed of the property, and after the taxtitle became absolute gave a quit-claim to the company which it accepted. Held, a recognition of his agency in making the tax purchase.

A second mortgagee who has foreclosed and bidden in the premises can obtain a tax-title to them, and if it is allowed to become absolute he has a right to use it as a defense to an action of ejectment brought by the first mortgagee, unless the latter tenders re-payment.

A tenant who has covenanted to pay the taxes cannot, after neglecting to do so, take a tax-title and cut off his landlord's rights: nor can a purchaser in possession under an executory contract so cut off his vendor's rights, nor a mortgager those of his mortgagee. A purchase made under such circumstances will be conclusively presumed to have been made in the performance of duty and not in repudiation of it.

A second mortgagee is under no obligation to protect the lien of the first mortgagee by payment of taxes or by purchasing the premises for his benefit at a tax-sale; but if he does pay or purchase, the act ipso facto constitutes a protection.

A mortgagee does not owe any duty to a subsequent mortgagee or to the owner, to protect the latter's lien as against tax-sales: the duty is to the State, which will sell the interest of all if neither pays.

The duty to pay taxes on mortgaged land is primarily on the mortgager, but if he makes default any mortgagee may pay, and if no one does so the land will be sold and his lien extinguished. But a payment by a mortgagee is allowed to increase the amount of his incumbrance in order to secure its re-payment by the mortgager.

A tax-deed giving a prima facie title constitutes at law a perfect defense to an action of ejectment.

Foreclosure cuts off a subsequent mortgage, but where the amount of a tax-purchase has been added to the later incumbrance the additional lien therefor is not extinguished with the mortgage.

A tax-title relates back from the time it becomes absolute to the time of the tax-purchase for all purposes of substantial justice, but not

45 MICH-8

otherwise; and it cannot be used to divest rights acquired since the period to which it would relate.

Error to Wayne. Submitted Oct. 22. Decided Jan. 5.

EJECTMENT. Defendants bring error.

Reversed.

One

Moore, Canfield & Warner for plaintiffs in error. is not estopped from purchasing tax-titles who is under no obligation to pay the tax: Sands v. Davis 40 Mich. 14; Moss v. Shear 25 Cal. 45; Bowman v. Cockrill 6 Kan. 331; Stubblefield v. Bordus 92 Ill. 279; Blackwell on Taxtitles (2d. ed) 400; a mortgagee can buy an outstanding title, Ten Eyck v. Craig 2 Iun 452: 62 N. Y. 406; Trimm v. Marsh 54 N. Y. 599; Williams v. Townsend 31 N. Y. 411.

Geo. H. Lothrop, Edwin F. Conely and G. V. N. Lothrop for defendant in error. The attorney of a mortgagee who has foreclosed in the mortgagee's name cannot take a tax-title on the property, and if he does so, must deed to his client: Matthews v. Light 32 Me. 305; Oldhams v. Jones 5 B. Monr. 458; Krutz v. Fisher 8 Kan. 90; Bernal v. Lynch 36 Cal. 135; McMahon v. McGraw 26 Wis. 614; Barton v. Moss 32 Ill. 50; Schedda v. Sawyer 4 McLean 181; Jewett v. Miller 10 N. Y. 402; Linsley v. Sinclair 24 Mich. 380; Bartholemew v. Leech 7 Watts 472; title cannot be obtained by a tax purchase made by the owner, after neglecting to pay the tax, for the purpose of divesting the interest of a grantee or mortgagee: Jones v. Davis 24 Wis. 229; Swift v. Agnes 33 Wis. 228; Woodburn v. Farmers & Mech. Bk. 5 W. & S. 447; Gardiner v. Gerrish 23 Me. 46; Fuller v. Hodgdon 25 Me. 243; Frye v. Bank of Illinois 11 Ill. 367; Porter v. Lafferty 33 Iowa 254; nor by a tenant for life, to the prejudice of the reversioner: Phelan v. Boylan 25 Wis. 679; Prettyman v. Walston 34 Ill. 175; Tiggins v. Crosby 40 Ill. 260; Varney v. Stevens 22 Me. 331; Burhans v. Van Zandt 7 N. Y. 523; Cairns v. Chabert 3 Edw. Ch. 312; nor by tenants for years: Carithers v. Weaver 7 Kans. 110; Blake v. Howe 1 Aikens 306; Shepardson v. Elmore 19