gan v. Mowry, 84 Cal. 456.) Being real property the interest sued for could be conveyed only by deed; and, to support the deed of a corporation (when, as in this case, it does not bear the corporate seal) it is incumbent on the party relying on it to show affirmatively that it was executed by authority of a resolution of the board of directors, entered on the records of the corporation, or that it was ratified by such a resolution. (Salfield v. Sutter County L. etc. Co., 94 Cal. 546.) In the present case the deeds relied on by plaintiff were neither authorized nor ratified by any such resolution. The only resolutions of the board of directors on the subject were the following.

[Nov. 7, 1887.] "Moved and seconded that the company gives and exchanges with Messrs. Howes and Fudickar forty-two inches of water from the Raynor supply for the forty-two inches now owned by them from the Vivienda well supply, and that the forty-two inches so received from Messrs. Howes and Fudickar be sold by the company and the proceeds thereof to represent the proceeds of the forty-two inches so exchanged from the Raynor supply, and be diverted with Mr. Raynor's consent according to the contract with him, the said water to be given and taken in exchange at the common point of meeting, the northeast corner of the Goldkoffer property. Motion carried."

[May 11, 1888.] "It was moved and seconded that the president and secretary be authorized to carry out the terms of that certain resolution heretofore made by this company for exchange with G. A. Fudickar and F. C. Howes of forty-two inches of water, and that the president and secretary be authorized to execute and deliver and receive deeds in accordance with the above."

[March 12, 1889.] "Resolved, that the forty-two inches of water deeded to Fudickar and Howes be carried free of charge by this company to the lands of Fudickar and Howes, in section 32, township 1 south, range 4 west, S. B. M., on the East Riverside mesa. Motion seconded by Mr. Howes and carried."

We do not discover anything in the transcript to show that the second of the above-quoted resolutions was ever adopted by the board. But, however this may be, it is evident that none of these resolutions purport to grant any authority to convey any interest in the canal or pipe line of the corporation. At the most they authorize only a conveyance of the water right (not in dispute in this action) and an agreement on the part of the corporation to deliver that water at a certain point or points. The deeds executed by the president and secretary, so far as they purport to convey any interest in the canal and pipe line, were, therefore, unauthorized and void. They were not, as respondent contends, merely voidable. They were not the acts of the corporation at all, and the parol acts of ratification and acquiescence relied on by plaintiff did not validate them (Civ. Code, sec. 2310), and, therefore, cannot aid the plaintiff in this action.

These considerations dispose of plaintiff's right to recover under the pleadings as now framed, and necessitate a reversal. But the evidence tends strongly to suggest that, though the legal title is in defendant, plaintiff is equitably entitled to a conveyance from defendant, as a purchaser from the Vivienda Water Company with notice. of plaintiff's equities. As the case appears to have been tried on both sides upon a wrong theory, the evidence is not clear on this point, and it would not be proper to express, at this time, any opinion as to its sufficiency for that purpose. But, as it appears that under pleadings properly framed for that purpose plaintiff might be entitled to a specific performance of the contract between the corporation and Fudickar and Howes, or some other equitable remedy, we think the ends of justice will be best subserved by permitting the plaintiff to amend so as to avail herself of her equities, if any. In this view it is probable that many of the questions discussed on this appeal will not arise upon a new trial, and we will, therefore, briefly state our conclusions on such points

only as appear to be necessary for the guidance of the court below.

A contract between a corporation and one of its directors by which such director obtains property of the corporation, or some other advantage to himself, is not absolutely void, but is voidable only at the instance of the corporation or of its stockholders. The corporation, as well as its stockholders, may moreover be estopped from questioning its validity, either by express ratification or by their laches or acquiescence. On these points the burden of proof is upon the director claiming the benefit of the contract.

The right to avoid such a contract must be exercised by the corporation itself (or a stockholder acting for it), and cannot be transferred to another. (Sanborn v. Doe, 92 Cal. 153; 27 Am. St. Rep. 101.) If, however, in a purely equitable action, the rights of the plaintiff depend entirely upon such a contract, the plaintiff must show the existence of the facts upon which the validity of the contract depends, even though the defendant is not the corporation, but merely its assignee; because a plaintiff must come into a court of equity with clean hands. But, if the defendant claims only under a quitclaim deed from the corporation, and does not otherwise connect himself with the rights of the stockholders, this rule will not apply, unless the case of the plaintiff discloses actual, as distinguished from constructive, fraud. The defendant in such a case, not having been injured by the transaction, cannot be heard to complain of it.

The deed to plaintiff from Fudickar is not void for uncertainty. It contains a description which might, by appropriate evidence of the facts therein referred to, be shown to apply to the property here in controversy. Nothing more is required of any deed.

The other points made cannot be properly decided upon the present record, and no reference to them is necessary.

The judgment and order denying a new trial are re

versed, and the cause remanded to the court below, with directions to permit the parties to amend their pleadings as they may be advised, and for such further proceedings as shall not be inconsistent with this opinion.

HARRISON, J., and GAROUTTE, J., concurred.

Hearing in Bank denied.

[No. 18415. Department Two.-September 5, 1895.] MOSES ADLER ET AL., RESPONDENTS, v. R. C. SARGENT, APPELLANT, AND BANK OF LODI, RE

SPONDENT.

MORTGAGE-TRANSFER OF NOTE- NONDELIVERY OF MORTGAGE SUBSEQUENT ASSIGNMENT.-The transfer of a note secured by mortgage carries with it the mortgage security, without delivery of the mortgage; and another person obtaining possession, under a subsequent assignment from the mortgagee, of the mere instrument of mortgage, which purports on its face to be security for the note, is bound to know that if the note had been assigned, the mortgage is of no legal value. ID. RECORDATION-ASSIGNMENT OF

MORTGAGE-FORGED NOTE-PRIORITY OF UNRECORDED TRANSFER.-An assignment of a mortgage is not a grant of an estate in real property, and does not require to be recorded as such; and the provision for the recordation of an assignment of a mortgage in section 2934 of the Civil Code only makes such record operate as notice to all persons subsequently deriving title to the mortgage from the assignor; and the record of a subsequent assignment of the mortgage to one to whom the mortgagee had delivered the mortgage instrument, together with a forged copy of the note, does not take precedence of a prior unrecorded assignment of the mortgage to one to whom the genuine note was transferred.

ID. MORTGAGE INCIDENT TO DEBT-RIGHT OF FORECLOSURE-POSSESSION OF MORTGAGE.-A mortgage is a mere incident to the debt which it secures, and follows the transfer of a note with the full effect of a regular assignment; and the one having the right to the note has the right to foreclose the mortgage, although the mortgage be in the possession of another. ID.-ACCEPTANCE OF SECOND ASSIGNMENT-WAIVER-RIGHT OF PURCHASER OF MORTGAGE.-A bank holding a note secured by mortgage, and an unrecorded assignment of the mortgage, as security for a debt of the mortgagee, the latter retaining possession of the mortgage, does not waive its right to the mortgage securing the note by taking a new note for its indebtedness, indorsed by

another person for further security, and a second assignment of the mortgage by way of further assurance, in connection with an assignment of an additional note and mortgage forged by the mortgagee; and a subsequent purchaser of the mortgage from the mortgagee, who received the instrument of mortgage and a forged copy of the note from the mortgagee, and recorded his assignment prior to the second assignment to the bank, acquires no rights by such action of the bank.

APPEAL from a judgment of the Superior Court of Yolo County, and from an order denying a new trial. W. H. GRANT, Judge.

The facts are stated in the opinion of the court.

Woods & Levinsky, for Appellant.

Moseley, possessing the mortgage and a note, which was a true copy of the note set forth in the mortgage, and selling the same to Sargent, was the presumptive owner and holder of the note and mortgage, and warranted their validity. (Civ. Code, sec. 1774.) The bank, in failing to record the assignment of the mortgage and allowing Moseley to retain the mortgage, was guilty of negligence, and the bank should suffer the loss rather than Sargent. (Civ. Code, sec. 3543; Schultz v. McLean, 93 Cal. 329; Graff v. Middleton, 43 Cal. 341; Harris v. Hillegass, 66 Cal. 79.) There was no delivery of the mortgage, and the transfer to the bank was fraudulent as against subsequent purchasers. (Civ. Code, sec. 3440.) It requires a deed to make a legal assignment. (Young v. Miller, 6 Gray, 152.) An assignment of mortgage may be recorded. (Civ. Code, secs. 858, 1158, 2934.) The first record of a lien has priority over a prior unrecorded lien. (Civ. Code, sec. 1107; Hoag v. Howard, 55 Cal. 564; Dingley v. Bank of Ventura, 57 Cal. 467; Mesick v. Sunderland, 6 Cal. 297; Bird v. Dennison, 7 Cal. 297.) The indorsement of a note carries with it the security only as between the parties to the transaction, but is void as against third persons. (Downing v. Le Du, 82 Cal. 471.) The agreement to purchase the McBride note as security did not create a lien in favor of the bank. (Hitchcock v. Hassett, 71 Cal.