The appellees seek by this suit to be subrogated to the rights of the state, and to charge the mortgaged property and interests with the amount so paid by them, with interest thereon, and also with such sums as may be ascertained to be due by reason of liabilities incurred, and costs, time, and labor expended by them in and about the trust. The company resists each of the claims asserted by the appellees. Its answer proceeds mainly upon the ground that the bonds secured by the deed of May 2, 1877, were and are void under the constitution and laws of Arkansas, having been issued, it is alleged, to the stockholders of the appellant without consideration in money, labor, or property actually received, of which fact the plaintiffs and every original taker of the bonds were advised, and as to which subsequent takers, if such there were, were put upon inquiry by the recitals in the mortgage securing their payment. Consequently it is contended the appellees were under no duty, and had no legal right as trustees, or in any other capacity, to intervene and satisfy the decree in favor of the state, or to incur liability or costs in reference to the defendant's property. The company also filed a cross-bill, setting forth the same grounds, and praying that upon final hearing the deed of May 2, 1877, and the bonds thereby secured, be declared void.
The court sustained exceptions to the answer, and a demurrer to the cross-bill, dismissing the latter for want of equity, and rendering a decree in accordance with the prayer of the bill. By the decree the appellees were subrogated to all of the rights of the state under the decree of March 4, 1882; and for the amount so paid by them, with interest thereon from March 25, 1882, at the rate of 8 per cent. per annum, aggregating $261,456.27, together with interest on the latter sum at the same rate, from the date of the decree herein, they were adjudged to have a line upon the property, rights, and interests embraced by the deed of May 2, 1877, subject-the appellees having consented thereto-to the lien created by that deed, as well as by a deed executed May 1, 1877. A decree was also entered against the company for $29,580.87, the amount found due to the plaintiffs for services rendered in and about the trust, and for counsel fees and costs in this suit. To this provision of the decree the appellant also objects upon grounds to which reference will be hereafter made.
The principal question relates to the validity of the $2,600,000 issue of bonds secured by the deed of May 2, 1877.
The principal facts, chronologically stated, which bear upon this and other questions in the case, are as follows: