delivered the opinion of the Court:
Some of the questions presented by this record are of unusual interest, and have been discussed by counsel on both sides with marked ability; and after a careful consideration of all that has been urged both pro and con, and a laborious and patient examination of the vast amount of testimony which has been taken in the cause, with a view of *198obtaining an accurate knowledge of the material facts upon which the controversy depends, it remains for ns to present our own conclusions upon the more important of these questions, together with some of the considerations which have led to the results reached.
Perhaps the most important of all the questions presented-for our determination is the one first discussed in appellant’s brief. It is earnestly insisted that the bonds in question are absolutely void, bn the ground they were. issued and put in circulation in contravention of section 13 of article 11. of the present constitution, and also of section 22, chapter 114, Eevised Statutes. The section of the constitution relied on provides, that “no railroad corporation shall issue any stock or bonds except for money, labor or property actually received and applied to the purposes for which such corporation was created; and all stocks, dividends, and other fictitious increase of the capital stock or indebtedness of any such corporation, shall be void.” The section of the statute cited is almost a literal copy of the above provision of the constitution.
It is claimed that the evidence shows that the bonds in question, after having been prepared and executed by the company, were placed in the hands of Smith for the purpose of having them certified by Dennison, the trustee, as required by the provisions of the trust deed, and when thus certified to be returned to the company, and for no other purpose, and that the subsequent appropriation of them by Thompson, Griggs & Co. was without any warrant or authority from the company, but that, conceding the company’s officers and agents assented to such appropriation, it affirmatively appears that the bonds, at the time of their delivery to them, were not given for either money, labor or property which0 had theretofore been actually received or applied to the purposes for which the company was created, wherefore it is concluded that the bonds are absolutely void, even in the hands of innocent holders.
*199Assuming, for the purposes of the argument, the facts to he as claimed by appellant’s counsel, is the construction which they place upon this provision of the constitution the true one ? It could hardly have been the intention of the framers of the constitution by this provision to prohibit the building of railroads altogether with means to be realized from the sale of bonds and stocks, and yet such would undoubtedly be its practical effect if the construction contended for is correct, for. it is hardly reasonable to suppose that capitalists would advance money to build a railway upon the mere promise of the company at some future day, after the completion of the road, to issue bonds or stock for the money thus advanced. Nor is it at all probable, on the other hand, that promoters of railroad enterprises would undertake to build railways without present means to defray current expenses. This could not be done. Laborers, mechanics and material-men have to be paid in ready money, and this must1 be raised either by negotiating the bonds or stock of the company at the outset, or the contractors or promoters must advance it out of their own pockets, upon the faith of the company’s being able, at some future day, to negotiate its bonds for the purpose of reimbursing them. This course would be so hazardous that no one would be safe in adopting it, and few, if any, prudent business men would be likely to do so. The negotiation of railway bonds depends so much upon the temper of the times and the state of the money market when they are offered, that none but men of unlimited means could safely commence the construction of a railroad under such circumstances. Men of moderate means, relying upon such resources, would, in cases of this kind, be exposed to the danger of being forced to abandon the enterprise altogether, after having exhausted their own private funds in the prosecution of the work, by reason of being unable to negotiate bonds for the work actually done.
*200Every railway company, when first organized, has neither money nor property of any description, outside of its stock, with which to build its road, hence, if it builds it at all, it must of necessity build it on a credit, unless it is built exclusively out of the proceeds of its stock; but even this could not be done under the construction contended for, because if that be the true construction, the company would be as powerless to negotiate its stock in advance of the work actually performed as it would its bonds. Both stock and bonds, it will be perceived, stand upon the same footing in this respect. Uniform experience shows that public and private interests alike demand that in the building of a railroad the means for that purpose should be fully and definitely provided before the commencement of the work, and this is especially necessary when the sale of the company’s bonds or stock is relied on for that purpose, which, we may add, is almost universally the case.
But it is quite manifest that means to build a railway could not be thus raised in advance if the position of appellant is correct. Upon the hypothesis the construction in question is the proper one, the result would be this: Every share of stock and every bond issued by a railroad company in this State since the adoption of the constitution, is absolutely void in the hands even of an innocent holder, unless the same was issued in satisfaction of an existing liability of the company on account of money, labor or property previously received and applied to some corporate purpose. It is difficult, if not impossible, to fully estimate the consequences of such a holding. It is a matter of general notoriety, within the range of every man’s knowledge of ordinary information, that a large proportion of the railroad bonds that are now upon the market in the hands of innocent holders, whose proceeds have been applied in establishing and building up the magnificent railway system in our State, were originally issued and sold upon the market before any con*201siderable amount of money, labor or property was expended in building the roads, or for other corporate purpose, and yet, if the construction contended for is to prevail, it^ would defeat all these bonds. Who has ever supposed that a dealer in railroad stocks, by virtue of the provision in question, can not with safety buy a single share of stock in any of the railroad companies of the State without first ascertaining and satisfying himself it was originally issued by the company in discharge of some existing liability on account of money, property or labor having been previously received and actually applied by the company to some corporate purpose? And yet such precaution would be necessary under the rule insisted on.
The very statement of the proposition affords ample evidence - that such could not have been the intention of the framers of the constitution. The latter part of the clause of the constitution in question, which declares that “all stocks, dividends and other fictitious increase of the capital stock or indebtedness of such corporation shall be void, ” we think clearly points out the chief object which the constitutional convention sought to accomplish in adopting it, and to this we must look, in a large degree, for a solution of the language which precedes it. The object was doubtless to prevent reckless and unscrupulous speculators, under the guise or pretense of building a railroad, or of accomplishing some other legitimate corporate purpose, from fraudulently issuing and putting upon the market bonds or stocks that do not and are not intended to represent money or property of any kind, either in possession or expectancy, the stock or bonds in such case being entirely fictitious.
We can not believe it was intended by the provision in question to interfere with the usual and' customary methods Of raising funds by railroad companies for the purpose of building their roads, or of accomplishing other legitimate corporate purposes. To hold that such a company can not, *202in good faith, issue its stocks or bonds for ready money to build its road, or to effectuate other lawful objects, is, in effect, to deprive it of the only means Repossesses of carrying into effect the purposes of its creation. Under this provision of the constitution, railroad companies have no right to lend, give away, or sell on credit, their bonds or stock, nor have they the right to dispose of either, except for a present consideration, and for a corporate purpose. But in such case, if the company should subsequently divert the proceeds to other than corporate purposes, the purchaser of such stock or bonds, who has acted in good faith in the matter, can not be affected by the subsequent misappropriation by the company. To hold him or his assignee'responsible for the application of the proceeds, would be to effectually destroy the usefulness and value of such securities. In short, we-are of opinion that when one, for a present consideration, in good faith purchases bonds or stocks in the regular course of business from a,railroad company, and such consideration is accepted by the proper officer of the company, and nothing appears to show that it is to be used or applied to other than legitimate corporate purposes, such bonds or stocks, when thus issued, will be regarded as having been issued for money, labor or property (as the case may be) “actually received, and applied, ” within the meaning of the constitutional provision in question. Any other construction would lead to consequences of the most serious character, which could not have been intended by the framers of the constitution.
We do not at all question the general principle contended for by appellant’s counsel, that negotiable securities issued without authority of law, or in express violation of a statute, are inoperative and void in the hands of even innocent holders ; yet there is another rule of law equally well settled, namely, that although a contract entered into by the agents or officers of a private corporation is ultra vires, and therefore *203not binding on the company so long as it remains executory, yet if the company in such case knowingly permits the other contracting party, without objection, to" go on and perform the contract on his part, and thereby obtains and appropriates to its own use money, property or labor in furtherance of some legitimate corporate purpose, it will be estopped from denying its liability on such contract. Bradley v. Ballard, 55 Ill. 413; Chicago Building Society v. Crowell, 65 id. 453; City of East St. Louis v. East St. Louis Gas Light and Coke Co. 98 id. 415; Darst v. Gale, 83 id. 140.
The claim of appellant that the fifteen hundred bonds were simply sent to Smith for the purpose of having them certified by Dennison, and at once returned to the company, and that it was intended they should all be so certified and returned at the same time, and that Dennison had no right to certify six hundred of them and not the others, and that this was done without the knowledge or consent of the company, is inconsistent with the uncontroverted facts in this case. The claim, also, that the company was ignorant of the fact that these six hundred certified bonds were being used by Thompson, Griggs & Co., during the year 1873, after the interest had been guaranteed by the Indianapolis, Bloomington and Western Railway Company, is also inconsistent with admitted facts. The undisputed fact is, that more than a year after these bonds had been delivered to Smith, a member and the financial agent of the firm of Thompson, Griggs & Co., and after the work on the road had been entirely suspended, the company executed a perpetual leas# of the completed portion of the road lying between Pekin and Peoria, to the Indianapolis, Bloomington and Western Railway Company, in which the latter company, as a part of the consideration of the lease, expressly undertook the payment of the interest on the six hundred bonds in question.
If these bonds were not regarded by the company as standing on a different footing from the remaining nine hundred *204not certified by Dennison, how did it happen that the interest on them was provided for, and not on th'e others ? No one connected with the railroad company could have been ignorant of the fact that Thompson, Griggs & Co. had already at that time expended of their own means in procuring the right of way, building the bridge and so much of the road as was then completed, an amount nearly, if not quite, equal to the full value of these bonds, and that they were then in the hands of that firm, and in justice belonged to them, even if there had never been any formal delivery of them. Under these circumstances we can not but regard the provision in the lease by which the lessee assumed the payment of the interest, as an official recognition on the part of the company of the fact that these bonds then represented an outstanding indebtedness against it. This being so, would it not be wholly inconsistent with every conception of equity to permit the company to now come into court and defeat a recovery on them, on the ground that there are some unadjusted equities between it and Thompson, Griggs & Co., or that there was never any formal delivery of them to that firm ?
The fact is patent and uncontroverted that the road, including the bridge, was built, so far as it was built at all, exclusively with means advanced by Thompson, Griggs & Co., which are represented by the bonds now in suit. If the railroad company succeeds in defeating a recovery on the bonds, what is the result? Thompson, Griggs & Co. will have no claim upon the road, for they have already reimbursed themselves by a sale of the bonds to the present holders, and if the latter can not recover there can be no recovery at all, and the consequence is, the railroad company finds itself the absolute owner of an unincumbered railway, supposed to be worth about $50,000 a year, which has cost it comparatively nothing, while the bondholders, who ultimately furnished the money that built it, are turned out of court without a cent. If such is to be the result, it is certainly a *205piece of model financiering on the part of the company, if we leave out of view the manifest injustice of the thing.
The company insists that it has sustained large damages by reason of the contractors’ failure to complete the road to Springfield, and from other breaches of the construction contract, and it is earnestly contended, that even admitting these bonds were delivered by the company to Thompson, Griggs & Co., as claimed by appellee, still, under the rule of Olds v. Cummings, 31 Ill. 188, the holders of the bonds, so far as the deed of trust is concerned, took them subject to all equities the company may have against the contractors. The rule in that case rests, at least in part, on technical grounds, which have lost much of their force in more recent times by reason of the manifest tendency of judicial thought to an equitable standard, and while it is not intended to question the authority of that case, yet, for the reasons suggested, we do not think the principle should be extended to cases that are not clearly shown to be within the rule there announced. In the case of an ordinary mortgage or deed of trust to secure a temporary loan from one individual to another, the note or evidence of the indebtedness taken at the time, although it may be negotiable, is not given for the express purpose of being put upon the market and used as a permanent investment of capital, as in the case of railroad securities, nor does the mortgagee in such case, as a general rule, rely wholly on the security which the mortgage affords, as is always done in the case of railroad mortgage bonds.
In ordinary cases of the kind suggested, the mortgage is uniformly made for the benefit of some one specifically mentioned (usually the payee of the note), and the legal interest in such note is by operation of law vested in him, and can only be transferred to another by his indorsement, and the mortgage passes in equity, as an incident of the debt, by virtue of such indorsement. The case before us is unlike the ordinary one suggested, in several essential particulars. The *206bonds in question are not payable to Thompson, Griggs & Co., nor is the trust deed, so far as anything appears on the face of it, made to them or for their benefit. Indeed, they are not so much as mentioned either in the bonds or the trust deed. On the contrary, the bonds are in exprése terms made payable to “the holder” of the bonds, and the deed of trust is expressly declared to be “for the benefit, protection and security of the persons or corporations toho shall hold the bonds about to be assured, ” etc. Thus it clearly appears that, so far as the record shows, Thompson, Griggs. & Co. were total , strangers to the transaction, and upon what principle any i equities the company may have against them can be interj posed so as to defeat the title of the present holders, is not 1 perceived. It clearly can not be done. In short, we hold the doctrine of Olds v. Cummings has no application to deeds of trust given to secure railroad coupon bonds intended to be thrown upon the market and circulated as commercial paper, and to be used as securities for permanent investments. To hold otherwise would be doing violence to the manifest intention of the parties to such instruments, and would unquestionably lead to very disastrous consequences. It is true that a part of the reasoning by which our conclusion upon this question is reached in the present case, applies to some of the cases following Olds v. Cummings, but a review of those eases will clearly show that the present case may be distinguished from all of them in this, that both the deed of trust and the bonds, as we have already seen, show expressly upon their face that they were executed for the benefit of the holders of the bonds, whoever they might be.
The case of Chicago, Danville and Vincennes Ry. Co. v. Loewenthal, 93 Ill. 433, is cited as announcing a different view from that here presented. It is true that a part of the reasoning of the court in that case is not to be reconciled with what we have here said. It is sufficient, however, to say, with reference to that case, that what appears in the *207opinion relating to this question was said in arguendo, and after the case had been decided upon another distinct ground, and without any argument of the question except upon one side. Under these circumstances, what was there said ought . not to be, and is not, regarded as conclusive of the question, and upon more mature consideration of the subject we are fully satisfied the view now presented is the correct one.
The conclusions reached upon the questions already discussed render it unnecessary to consider the state of accounts between appellant and Thompson, Griggs & Co. Whether, upon a fair adjustment of their claims, there is anything due either way, is a matter in which the bondholders have no concern, since they can not be affected, as we have already seen, by any equities between them. For the same reason it is also unnecessary to consider other matters discussed by counsel in their briefs.
The decree orders a sale of the whole of the mortgaged property, both real and personal, tangible and intangible, absolutely and without redemption, and in this it is claimed there is error. This question is one of unusual importance and interest, and while it has frequently arisen in and been passed upon by the Federal courts of this State, yet, so far as we are advised, it has never before been directly presented to this court.
The right of redemption in any case is purely statutory, and whoever claims such right is bound to bring himself clearly within the provisions of the statute. The act of 1845 relating,to this subject was in force at the time of the execution of the trust deed, and the rights of the parties, so far as this question is concerned, must be controlled by it. By the 15th section of chapter 57, of the Bevised Statutes of 1845, it is provided, that when lands and tenements shall be sold on judgments at law, the defendants or others interested may, “within twelve months of such sale, redeem such lands or tenements by paying, ” etc., and by the 24th sec*208tion of the same chapter it is further provided, that “when lands shall be sold under and by virtue of any decree of a court of equity for the sale of mortgaged lands, it shall be lawful for the defendant or parties in interest to redeem the same in the manner prescribed for redemption of lands sold under judgments at law. ”
While it can not be seriously questioned that a railway track, considered without regard to its public character and the franchises usually connected with it, is “lands, ” or “lands and tenements, ” within the meaning of the above sections, yet the question here presented is, is a railway, its appurtenances and franchises, when legally mortgaged and ordered to be sold as an entirety, under a decree of foreclosure, lands or tenements, within the meaning of those sections ? A number of reasons suggest themselves to us why they should not be so considered. In the first place, when a railway, its appurtenances, privileges and franchises are mortgaged as a whole, there is, in our opinion, no power or authority to sell them separately. From the very nature of the property one would be useless without the other. The franchise could not be used at all without the road, and the road could not lawfully be used, as against the State, without the franchise. ' Under such circumstances, to avoid the possibility of conflicting ownerships, the law has wisely determined that both must be sold as an entirety. Chicago, Danville ancl Vincennes Ry. Co. v. Loewenthal, supra.
While the franchise to construct and operate a railway is generally regarded as a grant of a part of the sovereign power of the State, partaking of the nature of a quasi public trust, yet it is also treated, particularly at the present time, as a species of intangible personal property, and by the 84th section of the Eevenue act it is expressly required to be listed as such for the purposes of taxation. Now, while a railroad franchise, when considered by itself, will be treated as personal property, and the road itself, when so viewed, *209will be treated as realty, yet when considered as an entirety, as they must be when so mortgaged and sold, they are, strictly speaking, neither the one nor the other, within the meaning of the law pertaining to redemptions. From a sale of land a redemption is allowed,—from a sale of personal property no such redemption is permitted; and since the two are indissolubly combined, by virtue of the mortgage, decree and sale, there is just as much reason, so far as the question depends upon the two kinds of property when separately considered, for contending the right of redemption is denied, as there is that it is given. And since it devolves on the party alleging such right to show a clear ease within the statute, it follows that under the circumstances stated there would be no right of redemption.
But there are other considerations bearing on this question that should not be overlooked. In view of the public character of the road, it will not be questioned that the public generally have a direct interest in keeping it continuously open, without any material diminution of its capacity, to meet all the legitimate wants of the- public. It is, therefore, but just and proper that the foreclosure proceedings should be conducted in such a manner, having due regard to the private interests of all parties concerned, as to cause the least possible injury- or inconvenience to the public, and we are of opinion this will be more effectually accomplished by the method adopted than it can be in any other way. To have ordered a sale of the personal property separately, from which it is conceded there would be no redemption, and a sale of the realty with the right of redemption, as is claimed should have been done, it would most likely have resulted either in a sacrifice of the property, or some portion of it, or in embarrassing complications seriously affecting, at least for a while, the public interests. Moreover, it is difficult for us to believe that the wrecking of the property of a railroad company, and selling it out by piecemeal, would in any case *210be for the best interests either of the public or those having an interest in its assets. It is also equally difficult for us to see how any one would be likely to pay anything like the present value of the property of a railroad company, even when sold as an entirety, where the right of redemption is reserved. However necessary, the purchaser in such case would not be safe in making anything like expensive repairs, or in increasing the carrying capacity of the road to meet the demands of business and travel, until after the time of redemption had expired. Besides, being out of possession during the fifteen months allowed to redeem, he would have no right even to make such repairs and improvements without the consent of those having the road in charge, and it is quite reasonable to assume if the railroad company saw it could not redeem, or if it had no intention of redeeming, it would make no such repairs, and the public might thereby suffer great inconvenience, and the road be seriously injured. But as before stated, this question has frequently been before the Federal courts in this State, and so far as we are advised. those courts have uniformly held there is no redemption from a sale of this kind. So, whether the question is to be determined upon authority or upon grounds of public policy and convenience, we are of opinion the circuit court properly held there is no redemption from a sale of this kind.
Decree affirmed.