A railroad mortgage is made with refer- ence to the law of the state in which the subject-matter of the contract is, and in which the contract is made; and the law enters into and becomes a part of the con- tract as if it were there in express terms; 25 U. S. App. 415. In the absence of a provision to the con- trary, all bonds secured by a mortgage have an equal lien irrespective of the time at which they were negotiated; 55 Ohio St. 23; 122 Pa. 565; 44 N. E. Rep. (Ohio) 596. First mortgage bonds are prior to second mortgage bonds, even if subsequently nego- tiated; 8 Fed. Rep. 118. The invalidity of some of the bonds does not invalidate the mortgage; 118 U. S. 161. The negotiable character of the bonds extends also to the mortgage securing them, against which the mortgagor cannot defend on grounds which it cannot set up against bona fide holders of bonds; 16 Wall. 271, 452; 130 U. S. 268; 64 Me. 37; 122 Mass. 67; 89 Wis. 146; the rule in Ohio and Illinois is said to be different; 14 Ohio St. 396; 93 III. 433; see 79 Ala. 587. In case of default, an individual bondholder may sue the corporation, but after securing judgment cannot have execution on prop- erty covered by the mortgage, which is security for all the bondholders alike. As to the effect of recitals in bonds as notice, see RECITALS. In the surrender of corporate bonds and the substitution of new bonds, the latter will retain the security of the mortgage, unless an extinguishment was intended; 96 N. C. 298; see, also, 98 Ala. 92; 76 Fed. Rep. 43 (where under a reorganization plan the old bonds were deposited and were to be held by a trustee as additional secur- ity for the old bonds); but not where the mortgage was satisfied of record; 96 N. С. 298. A mere change in the form of the mort- gage debt, such as substituting new bonds for the old, will not affect the lien: nova- tion, especially when against the interest of the bondholders, must be clearly proved; 76 Fed. Rep. 38; and the funding of overdue interest and the issue of new evidence of indebtedness in place of the overdue coupons will not constitute a novation un- less there be clear proof of an intention to waive the lien; 3 Hughes 320; 33 Gratt. 586. A corporate mortgage may cover prop- erty acquired by the corporation after the mortgage is given. This has been sustained upon the theory that though ineffective as a conveyance, the mortgage operates as an executory agreement at- taching to the property when acquired; 63 Fed. Rep. 891. This rule, though contrary to the common law, has been established from necessity in the case of railroads, public policy requiring that a railroad be preserved intact as quasi-public property. The rule will be applied only where the mortgage expressly covers the subsequently acquired property. A railroad mortgage covers the road, although the route differs from that originally laid out. It covers, also, a right of way acquired subsequently to the mortgage, though here the mortgage would be strictly construed, and while held to apply to property used for railroad pur- poses, it would be held not to apply if not so used; 122 U. S. 82. It covers terminal facilities upon a line of railroad constructed or to be constructed between the named termini, together with all stations, etc.; 138 U. S. 414. See TERMINAL FACILITIES. It applies not only to legal titles but also to equitable rights and interests subsequently acquired either by or for the company; 149 U. S. 327; 130 id. 413; 164 id. 1; it embraces the lease of a belt line around a city acquired after the execution of the mortgage; 22 U. S. App. 54. It does not cover uncalled capital: [1897] 1 Ch. 406. Where the property acquired is at the time subject to existing liens, these liens are prior in right to the lien of the mortgage; 12 Wall. 362; 81 Fed. Rep. 772. See FUTURE