■ff' LEor LAV THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW GIFT OF Mytcn Glauber :X 925 SO. FAIRFAX AVE. ANGELES, CALIFC" ..V ^. J. Or THE L AW %^^ AS ESTABLISHED AND APPLIED IN THE UNITED STATES, GREAT BRITAIN AND HER COLONIES, WITH PROCEDURE andFORAIS BY JOHN W. SMITH, Esq. OF THE CHICAGO BAR SUPPLEMENT TO FIRST EDITION LAWYERS' CO-OPERATIVE PUBLISHING CO. K0C1IE8TER, N. Y. 1900 Kf . J. OX. 925 SO. FAIRFAX AVE. ... ■ r- . r- ^ /-^ A I 1 I' /-^ CI f I I Entered accorilinj? to Act of Congress in the year nineteen liundred, by THE LAWYERS' CO-OPEUATIVE PLULISHIXG CO. In the Ullice of the Librarian of Cougresd, at \Vushin{ftou, D. C. T mi E. n. ANDREWS, PHINTER, nOCHESTEH, N. Y. In recognition of the very gratifying reception my effort to pre- sent the kiw of this subject has met with from the profession, I have prepared a supplement to the original work, covering the later decisions to January 1, 1900, and enlarging upon some points where further study made it seem to me desirable. This Supj^le- ment follows the chapters and sections of the original work and may be referred to from it. J. W. S. Chicago, May, I'JOO. 609779 LAW OF RECEIVERSHIPS. suppleme:^t. Arranging the new matter with, reference to tlie appro- priate pages and sections of the original work. Page 10, sec. 5. — Of the appointment. (a) DiSCKETIOK OF COTJET. Appointment is in the discretion of the court. People, Gore, v. Illi- nois Bldg. d L. Asso. 56 111. App. 642 ; Crane v. McCoy, 1 Bond, 422 ; Beau- mont V. Beaumont, 166 Pa. 615; Farmers' Loan & T. Co. v. Chicago & A. It. Co. 27 Fed. Rep. 14G. The appointment is in the discre- tion of the court, as to the extent of property over which receiver is ap- pointed. Tressilian v. Coniffe, 4 Jr. Ch. Rep. 399. If the appointment is in the dis- cretion of court, and no abuse ap- pears, the appointment will not be interfered with. Wilcoxon Mfg. Co. V. Atkinson, 78 Ga. 338. The discretion of the court in ap- pointinof a receiver should not be in- terfered with, except where the lower court has clearly exceeded its juris- diction and there is no other ade- quate remedy. Ex parte Smith, 23 Ala. 94. There must be an abuse of dis- cretion in order to secure a reversal. Sanders v. Slaughter, 89 Ga. 34. Tlie court has a broad discretion in reference to the appointment when executions are returned unsat- isfied. Button v. Thomas, 97 Mich. 93 ; Bagley v. Scudder, 66 Mich. 97 ; Rankin v. Rothschild, 78 Mich. 10. In a suit to set aside proceedings alleged to be collusive, wherein a receiver has been appointed, it is dis- cretionary to appoint a new receiver, and not reviewable. Connolli/ v. Kretz, 78 N. Y. 620. An application for the appoint- ment of a receiver pending an appeal from a decree of foreclosure is ad- dressed to the sound discretion of the court in Nebraska, and will be denied where it appears that a greater injury would ensue from the appointment than from permitting the possession of the property to re- main undisturbed. Provident Life & T. Co. V. Keniston, 53 Neb. 86. Residence of defendant. A receiver of personal property may be appointed although the de- fendant resides in another state. Hellebush v. Blake, 119 Ind. 349. Page 12. — (b) Probability of plaintiff''s eecovery, A receiver will not be appointed to take possession of property and charge of business in the hands of a defendant, unless the plaintiff's right is suflicifntly probaI)le, or when it is not probable that such property will R. Supp. be lost or will sustain injury during tlin suit if it is loft in defendant's hands, or that the business will be mismanaged. Ogdcn City v. Bear Lake d River Waterworks d Irrig. Co. 16 Utah, 440, 41 L. R. A. 305. 1 §5 RECEIVERSHIPS— SUPPLEMENT. Where, in a petition for the ap- pointment of a receiver, tlie relief prayed for is that eoniphiinant's elaini be deereed a prior lien on all the insolvent's assets, and such relief cannot be granted, a receiver should not be granted. Hank of Florence v. United atatcs Sav. tC- L. Co. 104 Ala. 297. Paij,-c 14. — (c) Necessity of preserving property. A receiver of book accounts a~s- sipned by a debtor to one of his creditors will not be appointed pend- ing a suit by another creditor to set aside the assignment as fraudu- lent, where the assignee has put }n an answer denying the allegations of fraud and .asserting his right to the security, and it appears that. he has abundant means to respond in any amount for which he may be held lia- ble. Wacbcr v. Rosenstcin, G App. Div. 447. A receiver should never be appoint- ed over a mortgagee of chattels in possession, where there is a balance due him. Bayaud v. Fellows, 28 Barb. 451. In the absence of fraud, and where a corporation has parted with all its property and used the same in pay- ment of debts, a receiver will not be appointed. Halc-Bcrry Co. v. Dia- mond State Iron Co. 04 Ga. 61. And where rents are applied to the payment of the mortgage debt and necessary expenses in the manage- ment and care of the property, a re- ceiver will not be appointed. Myton V. Daren port, 'A Iowa, .583. Receiver not appointed where ad- ministrator has power to protect property. Veret v. Duprez, L. R. 6 Eq. 329. An order appointing a receiver pendente lite, in a proceeding under 3 How. (Mich.) Ann. Stat. § 87490, providing for the appointment of a receiver at tlie instance of persons having preferred claims under a vol- untary assignment, is improvident, if not an absolute nullity. Hall v. Wayne Circuit Judge, 111 Mich. 39.5. Because the husband of an execu- trix was in the West Indies, and not amenable to the process of court in case his wife as executrix should commit waste or refuse to pay, a re- ceiver was appointed. Decided by 9 the Lord Cliancellor of England in 1741. Taylor v. Allen, 2 Atk. 213. Notice of application for appoint- ment. As a general rule, notice of the ap- plication for the appointment of a receiver must be given. Mcstier v. A. Chcvallier I'avcnient Co. .51 La. Ann. 142; Schone v. Consolidated Bldg. d 8av. Co. 4 Ohio N. P. 210; titration v. Davidson, 1 Russ. & M. 484 ; Grace v. Curtiss, 3 Misc. 558 ; FAwood V. First Nat. Bank, 41 Kan. 475; Thompson v. Tower Mfg. Co. 87 Ala. 733; People, Port Huron d O. R. Co. v. St. Clair Circuit Judge, 31 Mich. 45G; Todd v. Crooke, 4 Sandf. C94; Cincinnati, 77. <€• D. R. Co. V. Jcwctt, 37 Ohio St. 049; Gil- bert V. Block, 51 111. App. 510; Mor- gan V. Von Kohnstamm, 9 Daly, 355, "OO How. Pr. 101. And so with regard to an appli- cation to extend the receivership. Le Grand v. O'Neill, 2 Ir. Ch. Rep. 509; State, Thjrnton-Thomas Mer- cantile Co. v. Second Judicial Dist. Ct. 20 :\Iont. 284; Sandf ord v. Sin- clair, 8 Paige, 373. In the absence of a statute the ap- pointment of a receiver ex parte is void, and can be assailed collaterally. 'Whitney v. Hanoi:er Nat. Bank, 71 Miss. 1009, 23 L. R. A. 531. Not required if defendant cannot be found and his counsel refuses to disclose his whereabouts. Hopper v. Davies, 70 111. App. 082; St. Louis, K. cC- S. R. Co. v. Wear, 135 Mo. 230, 33 L. R. A. 341 ; Hangan v. Netland, 51 Minn. 552; Hendrix v. Amcrcian Freehold Land Mortg. Co. 95 Ala. 313. Insolvency of the debtor alone is not sulficient ground for dispensing with notice. Smith Dimick Lumber Co. v. Teaguc (Ala.) 24 So. 4. There must be an emergent neces- GENERAL NATURE AND FEATURES OF THE LAW. §7 sity for the immediate appointment. Webb V. Allen, 15 Tex. Civ. App. 605. And the emergency must be shown by allegations. Jacksonville Ferry Co. V. Stockton (Fla.) 23 So. 557. _ And the allegations must be posi- tive, and the excuse for not giving notice must not be alleged as a mere conclusion or on belief, but the facts justifying such belief or establishing such conclusion must be stated. Ibid. Appointment ex parte may be made in aid of the jurisdiction of the court, or as a consei'vatory process incident to the principal demand. Re Moss Cigar Co. 50 La. Ann. 789. There must be an obvious necessity for prompt action. Bristow v. Home Bldg. Co. 91 Va. 18. Or extreme danger apparent. Fredenheim v. Rohr, 87 Va. 764. Or danger of irreparable loss. Cin- cinnati, H. & D. R. Co. v. Jeioett, 37 Ohio St. 649. Affidavits in support of the motion should also be served. Brundage v. Home Sav. & L. Asso. 11 Wash. 277. The statute frequently regulates the matter of notice in the appoint- ment of receivers. Allen v. Cooley, 53 S. C. 414. Under Mo. Laws 1895, p. 91, amending Mo. Rev. Stat. 1889, § 2246, the power of the court to ap- point a receiver on an ex parte ap- plication without notice should not extend beyond such time as is rea- sonably required to allow the de- fendant to show cause against the continuance of the receivership. St. Louis, K. & S. R. Co. v. Wear, 135 Mo. 230, 33 L. R. A. 341. At the next term, three months distant, is too long. Whitney v. Welch, 2 Abb. N. C. 442; Stohn v. Epstein, 6 N. Y. Civ. Proe. Rep. 36, 14 Abb. N. C. 322. In a proceeding under § 298, Code of New York, if the debtor has ab- sconded so that notice cannot be served on him the remedy is by credi- tors' bill, and not supplementary proceeding. Kemp v. Harding, 4 How. Pr. 178. To authorize the appointment un- der § 298, Code of New York, notice to the debtor must be given. Ibid. Construction of N. Y. Laws 1883, chap. 378, § 8, relative to copy of mo- tions, etc., and service on attorney general. Grcason v. Ooodwillie- Wyman Co. 38 Hun, 138. Notice of application for removal. The court may dismiss a suit against a corporation, and discharge a temporary receiver appointed therein, without any notice to the general creditors. Rockwell v. Port- land Sav. Bank, 31 Or. 431; Re Pre- mier Cycle Mfg. Co. 70 Conn. 473 ; Neiv York & W . JJ . Teleg. Co. v. Jew- ett, 115 N. Y. 166. Failure to direct notice to be given to the parties to an action for the re- moval of a receiver is not ground for reversal, where they in fact received actual notice before the hearing, and interposed no objection for want of formal service, and do not appeal. Re Premier Cycle Mfg. Co. 70 Conn. 473; Atty. Gen. v. Haberdasher's Co. 2 Jur. 915. Page 23, sec. 7. — Effect of appointment. (a) Places peoperty in custodia legis. Property belonging to one not a party to an action in which a re- ceiver has been appointed, and for which a receiver has not been asked, is not in custodia Icgis, so as to pre- clude its seizure under legal process, although the receiver has wrong- fully taken possession thereof. Farmers' & M. Nat. Bank v. Scott (Tex. Civ. App.) 45 S. W. 26. Property in hands of receiver is in cuslodia Icgis, and not subject to attachment. Texas Trunk R. Co. v. Lewis, 81 Tex. 1. 8 § 8 RECEIVERSHIPS— SUPPLEMENT. A rereivcr's custody is that of the Tremper, v. Brooks, 40 Mich. 333, 29 court which appointed him. People, Am. Rep. 534. Page 25, sec. 8. — Kinds of receivers. Ancillary receivers. A court of the state in which a corj>oration was orj^anizcd may ap- point a receiver of its property, not- withstivnding that all its property, both real and personal, is situated in another state; and the courts of the latter stat« may properly, under the rules of comity, appoint the same person as ancillary receiver. Bayne V. Brewer Pottery Co. 82 Fed. Rep. 391. A receiver will not be appointed by a court of insolvency, where the principal relief sought is injunction and other equitable relief, and the appointment of a receiver is ancil- lary thereto. Rehn v. North Fair- mount B. d S. Co. 5 Ohio N. P. 314. A court appointing ancillary re- ceivers of a foreign corporation to collect assets within its jurisdiction will not refuse to transmit the fund to the original receivers, in favor of domestic creditors, unless they have acquired some priority of lien on the corporate assets. New York Insu- lated Wire Co. v. Greeley, 59 U. S. App. GIO; /Sands v. E. 8. Greclei/ & Co. 88 Fed. Rep. 130, 31 C. C. A. 424. A United States circuit court which has appointed an ancillary re- ceiver for a foreign corporation has jurisdiction of a suit by him against citizens of the same state in which he lived to collect subscriptions to the corporation, the claims for which have been transmitted to him by the principal receiver appointed at the domicil of the corporation in an- other state. Sullivan v. Sheehan, 89 Fed. Rep. 247. An ancillary receiver of a foreign corporation, who, bj' the order of his appointment, is vested with the usual powers and duties of receivers, is authorized to make an accord and satisfaction of a claim. Goodrich v. Sanderson, 35 App. Div. 54(!. An ancillary receiver of a railroad cannot be sued in the jurisdiction of his appointment for a tort committed in the jurisdiction of the appoint- ment of the principal receiver, al- though the principal and ancillary receivers are the same persons. Union Trust Co. v. Atchison, T. d S. F. R. Co. 87 Fed. Rep. 530. It has been held in New York that on the application of a foreign re- ceiver an ancillary receiver will not be appointed in that state, where the foreign receiver has apparently all the power requisite. Mahon v. Onglcy Electric Co. 156 N. Y. 19G. An ancillary decree appointing re- ceivers will not be in eftect so modi- fied as to except a portion of the property in the district, where the original appointment includes all the property of the company. Mer- cantile Trust Co. V. Baltimore & 0. R. Co. 79 Fed. Rep. 389. A motion to allow an ancillary re- ceiver of an insolvent corporation to pay over the funds to the court of primary jurisdiction was held under advisement upon opposition by resi- dent creditors, where it appeared that they did not thoroughly under- stand the situation, and erroneously supposed if the fund was not trans- ferred their claims would be forth- with paid in full, but in fact con- tinued litigation would result, and the fund would probably not be dis- tributed for years. Sands v. E. S. Greeley d Co. 83 Fed. Rep. 772. Receivers pendente lite. The court has authority, in a proper case, to appoint a receiver to hold property pending litigation in the same court, in which case he is a receiver pendente lite. Tregaskis v. Detroit Super. Ct. Judge, 47 Mich. 509. A receiver may properly be ap- pointed, under the Texas statute, to take charge of property pending a litigation in regard thereto. Lynn V. First Nat. Bank, 40 S. W. 228. But where the statute provides for GENERAL NATURE AND FEATURES OF THE LAW. §9 the appointment of a receiver lie is v. Globe Mut. L. Ins. Co. 57 How. Pr. not a receiver pendente lite. People 481. Page 26, sec. 9. — At what stage appointed. Under N. Y. Code, § 294, a receiver will not be appointed before execu- tion returned unsatisfied. Darrow V. Lee, 16 Abb. Pr. 215. If the record shows the receiver was appointed on the same day the action was commenced, the pre- sumption is that each was done in the proper order. Elwood v. First 2^at. Bank, 41 Kan. 475. May be by statute in vacation or at chambers. Under Mo. Rev. Stat. 1889, § 2193, a receiver may be appointed in vacation, in any county within the circuit, no matter where the case is pending. St. Louis, K. <& S. R. Co. V. Wear, 135 Mo. 268, 33 L. R. A. 341. Under W. Va. Acts 1882, chap. 78, § 28 (Worth's Code, p. 743), a judge has no right to appoint a receiver of real estate, rents, etc., in vacation. Kerr v. Hill, 27 W. Va. 576. The appointment of a receiver in vacation is void unless there is statu- tory power to appoint. Guy v. Doalc, 47 Kan. 236. Under the California insolvency act of 1880 a receiver may be ap- pointed by a judge in chambers upon ex parte application. Real Estate Asso. V. San Francisco City & County Super. Ct. 60 Cal. 223. Appointed before service, when. In Tanfield v. Irvine, 2 Russ. Ch. 149, a receiver was appointed before .service, where the defendant was out of the jurisdiction. Macintosh v. Great Western R. Co. 18 L. J. Ch. N, S. 169. A receiver was denied where the defendant was alleged to hold ad- versely to the plaintiff, and was not served with process, tlyslop v. Hop- pock, 5 Ben. 447. Under a bill properly verified, an order appointing a receiver before appearance and before service of pro- cess cannot be disturbed. Sieg- mund V. Ascher, 37 111. App. 122; Gage v. Smith, 79 111. 219. Before answer. Where the application for a receiver is made before the defendant has filed his answer the defendant has a right to be heard upon affidavit as to his defense. Whitehouse v. Point De- fiance, T. & E. R. Co. 9 Wash. 558. A receiver has been refused before answer where the party applying could not make out an equitable title. Metcalfe v. Pulvertoft, 1 Ves. & B. 180. A motion for receiver before an- swer is unusual, but has been granted where defendant filed affidavit, in a strong case of waste. Jervis v. White, 6 Ves. Jr. 738; Middleton v. Dodswell, 13 Ves. Jr. 266; Hugonin V. Basely, 13 Ves. Jr. 105; Metcalfe V. Pulvertoft, 1 Ves. & B. 180 ; Duck- worth V. Trafford, 18 Ves. Jr. 283; Van7i V. Barnett, 2 Bro. Ch. 158; Compton V. Bearcroft, Trin. 1773, cited^ in 2 Bro. Ch. 158. It is the common practice to grant a receiver before answer where fraud is clearly proved by affidavit, or where it is shown that imminent danger will ensue unless the prop- erty is taken under the care of the court. Hugonin v. Basely, 13 Ves. Jr. 105; Middleton v. Dodswell, 13 Ves. Jr. 266; Lloyd v. Passingham, 16 Ves. Jr. 5^; Duckworth v. Traf- ford, 18 Ves. Jr. 283; Scott v. Bech- er, 4 Price, 346. And so, where the plaintiff states a clear equitable title. Metcalfe v. Pulvertoft, 1 Ves. & B. 180; Jervis v. White, 6 Ves. Jr. 738 ; Dawson v. Yates, 1 Beav. 301 ; Williamson v. Wilson, 1 Bland, Ch. 422; Blood- good V. Clark, 4 Paige, 577; Micou v. Moses, 72 Ala. 439; Probasco v. Probasco, 30 N. J. Eq. 108. § 10 RECElVERSniPS— SUPPLEMENT. A receiver will not be appointed before answer unless in case of im- pending mischief irreparable in case of delay. Oydcn v. Kip, 6 Johns. Cl». lUU; Wooilijatt V. (Jrcslcy, S Sim. 180. Pending return of inquisition. A receiver of a lunatic's estate may be ajipointed pending the return of the inquisition. Ke Kenton, 5 Binn. G13. Pending judgment on motion for new trial. After judgment and before the mo- tion for a new trial the court may appoint a receiver if the defendant is insolvent and is in receipt of large suras of money from the premises. ^Vhitnell V. Buckman, 2U Cal. 447; Bainbrigge v. Bainbrigge, 3 Eng. L. & Eq. 80. Pending a plea to an amended bill. The pendency of a plea to an amended bill does not prevent the hearing of a motion for a receiver, where the original bill is answered. Thompson v. Helby, 12 Sim. 100. On hearing. The appointment may be made on hearing. Shee v. Harris, 1 Jones & L. 91. At any time. Receiver may be appointed at any time when proceedings are pending. People, Fiieh, v. Mead, 29 How. Pr. 3U0. After appeal. Notwithstanding an appeal the court may appoint a receiver of the rents and prolits. Hut ton v. Loch- ridge, 27 \V. Va. 428. And even after appeal perfected. Chicago d S. E. R. Co. v. St. Clair, 144 Ind. 371; Brinkman v. Ritzin- ger, 82 Ind. 358. To deprive the trial court of juris- diction to appoint a receiver upon the ground that an appeal is pend- ing, if the pendency of an appeal de- feats its jurisdiction, it must clearly appear that the case is jiending in an appellate court that has juris- diction thereof. Stone v. Stone (Tex. Civ. App.) 43 S. W. 507. A judgment of atlirmance by an ap- pellate court after a receiver has been apjwinted for appellant, with- out substituting the receiver as ap- pellant, is valid and binding where the judgment allirmed was rendered before the receiver was appointed. Steinhauer v. Colmar, 11 Colo, App. 494. Page 27, sec. 10. — Application for; allegations; who appointed. Notice of. If the purpose is stated in the no- tice for application, the specific grounds of the application need not be stated. Columbia Finance & T. Co. v. Morgan, 19 Ky. L. Rep. 1701, Modified on Rehearing in 19 Ky. L. Rep. 17G5, which has Rehearing De- nied in 19 Ky. L.. Rep. 1765. In what action. Ind. Code, § 1222, authorizes the appointment of a receiver, without regard to the form of action, when- ever justice requires it. Hcllebush V. Blake, 119 Ind. 349. Under the judicature act of 1873, in England the appointment of a re- ceiver may be made in the original action, and a bill in chancery after judgment is no longer required, though such practice would be prop- er. Smith V. Coicell, L. R. 6 Q. B. Div. 75. Page 27.— (a) The court, at the instance of one to whom a married woman has been ordered to pay, out of her separate 6 By whom ]M.iDE. estate only, certain costs of a maxi- mum amount, which have not yet been taxed, may appoint a receiver GENERAL NATURE AND FEATURES OF THE LAW. 10 of her interest (not exceeding the maximum) in an estate, as security for the costs, where she has no other separate property out of which they can be paid. Cuin)nins v. Perkins (C. A.) [1S99] 1 Ch. 16, 68 L. J. Ch. N. S. 57. Receiver may be appointed on the application of the state. Where a lien on the rents is not given, and the security is not ample, and the mort- gagor is insolvent, a receiver will be appointed. State v. Northern C. R. Co. IS Md. 193; Columbian Athletic Club V. State, McMahon, 143 Ind. 98, 28 L. R. A. 727. A receiver will not be appointed at the instance of an insolvent cor- poration. Hugh V. McRae, Chase Dec. 466. A receiver will not be appointed on the application of a cestui que trust who has but a small interest in the matter of profits growing out of a contract. Webb v. Van Zandt ( 1863) 16 Abb. Pr. 314, note. An application for the appoint- ment of a receiver, although based upon concurrent demands of the parties, cannot be granted under N. Y. Code Civ. Proc. § 713, subd. 1, permitting a receiver before judg- ment, on the application of a party who establishes an apparent right to property in possession of the adverse party, where there is danger of its being lost. Dusenbury v. Dusen- burij, 11 Daly, 112. A creditor may apply, notwith- standing N. C. Acts 1891, chap. 155, and N. C. Acts 1893, chap. 478. North V. Piedmont Bank. 121 N. C. 343. Defendants may apply by a cross bill. Russell V. Mohrweil Lumber Co. 102 Ga. 593. A creditor or subsequent encum- brancer has no right to a receiver as against a mortgagee in possession. McConnell v. Denham, 72 Iowa, 494. The United States may, for the protection or reclamation of public lands, pursue the same equitable remedies, including the appointment of a receiver, that an individual un- der like circumstances may pursue in reference to his own lanrls, and is en- titled to the same measure of relief which would be extended to him. Steele v. Walker, 115 Ala. 485. If made by creditors they must have judgment. Brabrook Tailoring Co. V. Belding Bros. 40 111. App. 326. A receiver will not be appointed on the application of a general creditor. Cahn V. Johnson, 12 Tex. Civ. App. 304. A receiver will be appointed in a creditors' action where the property sought to be subjected to the pay- ment of the judgment is merchandise in the possession of the insolvent debtor, who has mortgaged it, but reserved from the sale sufficient to defray the running expenses of the business, to replenish stock, to sup- port his family, and to compensate himself. Hirsch v. Isreal, 106 Iowa, 498. A receiver of a corporation may be appointed in a proceeding insti- tuted by a simple-contract creditor, under 111. Rev. Stat. chap. 32, § 25, although the debt is not due. J. V. Northam d Co. v. Atherton, 67 111. App. 230. Objection to application. It is no objection to a motion to appoint, that answer under oath is waived. Root v. Safford, 2 Barb. Ch. 33. The proper time for presenting reasons why a receiver should not be appointed is when the application for his appointment is made. Mer- chants' Nat. Bank v. Braithicaite, 7 N. D. 358. A sheriff who levies an attachment has no right to object to an order ap- pointing a receiver of the property of the attachment defendant, where the attachment plaintiffs consent thereto. Pease v. F. S. Waters & Co. 60 111. App. 359. Bringing fund into court. If money in dispute is brought into court a receiver will not be ap- pointed. Curling v. Toionshend, 19 Ves. Jr. 028. Nor where security is given by de- fendants to satisfy any judgment which may be rendered against them. Conquest v. National Bank, 7 10 RECEIVERSHIPS— SUPPLEMENT. 97 Ga. 500; Ilaigh v. arattan, 1 Beav. 201. Application may he renewed when. The denial of an application for appointment of a receiver does not prevent a second application on the same ground as the first, but on a diU'erent sUite of facts. Columbia Finance tf- T. Co. v. Morgan. 19 Ky. L. Rep. 17(il, Modified on Rehearing in 10 Ky. L. Rep. ITtio, Which has Rehearing Denied in 19 Kj'. L. Rep. 17(>5; Atty. Gen. v. Ualicay, 1 Molloy, 95; Allen v. Harris, 4 Lea, 190. The continuance of an application for a receiver, made in vacation, is no bar to an application in term time. McCaskill v. Warreti, 58 Ga. 2S(>. The motion for appointment may be denied with leave to renew, if it does not distinctly appear that the judgment and execution were regu- lar. Bank of Woosicr v. Spencer, Clarke Ch. 386. A receiver of a corporation will not be appointed on a second appli- cation on proof concerning its in- solvency, which might have been of- fered on the previous application. Ft. W'atinc Electric Corp. v. Frank- lin Electric Light Co. (N. J. Eq.) 41 Atl. 217. An application for appointment in a suit that has been dismissed is not a bar to a second application in an- other suit subsequently brought. Anderson v. Powell, 44 Iowa, 20. Affidavits in support of application. Affidavits may accompany the pe- tition for tiie appointment of a re- ceiver, under Tex. Rev. Stat. 1895, art. 14U5, and may be read in sup- port of its allegations, but they can- not serve as pleadings in the case, or enlarge upon the case made by the petition. Webb v. Allen, 15 Tex. Civ. App. G05; Bell v. M'Loghin, Flan. & K. 272. Upon the hearing of a motion for the appointment of a receiver, affida- vits are properly stricken out as irrelevant, when they are not perti- nent to the issue presented, but relate to an issue already decided. Allen v. Cooley, 53 S. C. 414. Prayer for. A receiver will not be appointed if not praj'ed for. Barloic v. Gains, 8 Beav. 329. Absence of legal remedy. It should appear at the making of the application that no adequate legal remedy exists. Congden v. Lee, 3 Edw. Ch. 304. Page 28. — (c) Allegations ; averments. The averment in a complaint in an action to set aside a trust deed executed by a corporation, that the property would not bring in the open market more than a specified amount, which is less than the amount of the debt secured, unless an exceptional purchaser should be found, is not conclusive against the plaintiff upon the application for the appointment of a receiver to take charge of the property pending the action, that he would have no inter- est therein if the trust deed should be held good. Goshen Woolen Mills Co. v. City 'Nat. Bank, 150 Ind. 279. Page 28. — (c) 6. Laches in making application. After forty years' undisturbed possession, the court will not ap- point. G^ray v. Chaplin, 2 Russ. Ch. 126. Reference of, to master. On reference to a master on an ap- plication for a receiver, the only 8 question for examination is the re- ceivership question. Copous v. Kauffman, 8 Paige, 583. For ichom appointed. A receiver, while the instrument of the court for the conservation of MATTERS RELATING TO THE APPOINTJMENT. S U the estate, in a sense represents all parties in interest, and it is his duty and right to defend it against all claims which he deems unjust. Bosicorth V. Terminal R. Asso. 53 U. S. App. 302, SO Fed. Rep. 909, 26 C. C. A. 279. A receiver is appointed not only for plaintiff, but also for the benefit of all persons who may establish rights in the case. First ^^at. Bank V. Barnum Wire <& Iron Works, 60 Mich. 487. A receiver appointed under the act of Congress of March 3, 1887, repre- sents not only the corporation, but also the government and all who have interests in the property. United States v. Church of Jesus Christ of L. D. 8. 5 Utah, 538. The receiver of an insolvent life in- surance company is the trustee of and represents the creditors and all interested in the fund, including pol- icy holders, and is not the represen- tative of the latter to the exclusion of the corporation. Mason v. Henry, 152 X. Y. 529. Ordinarily the receiver is the agent of the mortgagor, but not so where other trusts are involved. Jef- freys V. Dickson, L. R. 1 Ch. 183. A receiA'er is not the representa- tive of the owner in regard to the fulfilment of his contracts, except such as he adopts. Brown v. War- ren, 78 Tex. 543, 11 L. R. A. 394. Must he assets. A receiver will not be appointed where the existing mortgages will consume all the property. Collins V. Myers, 68 Ga. 530. Where there are no assets of a building and loan association for dis- tribution; a receiver will not be ap- pointed. Barton v. Enterprise Loan & Bldg. Asso. 114 Ind. 220. Where it appears that a receiver will be useless the court will not ap- point. Mercantile Invest. & G. Trust Co. V. River Platte Trust, L. & A. Co. [1892] 2 Ch. 303; Barton v. Enterprise Loan & Bldg. Asso. 114 Ind. 226. A receiver will not be appointed after judgment debtor has become a bankrupt. Ryan v. Lefroy, 3 Ir. Ch. Rep. 351. When title in dispute. The court is slow to appoint a re- ceiver of real estate where the legal title is in controversy, and one of the parties is in the peaceable posses- sion under claim of right. This rule, however, does not apply where the property is already in the pos- session of a receiver, and a third party claiming adversely to the oth- ers asks to have the receivership con- tinued. State V. Allen, 1 Tenn. Ch. 512. A preliminary injunction or re- ceivership will not be granted upon the ground that the complainant is the owner of the property and busi- ness sought to be reached in the ac- tion, the legal title of which is in de- fendant, where the facts set up in the answer and affidavits amount to a denial of such ownership, and the case is not within any of the excep- tions to the general rule denying such relief under such circum- stances. Guild V. Meyer, 56 N. J. Eq. 183. A receiver will be appointed in an action involving the title and right to possession of real property, where the complainants have a good equi- table title to the land and in equity the right to its immediate posses- sion, although the naked legal title is outstanding, and it appears that the defendants in possession are insolv- ent and are destroying the timber on the land. Smith v. Lusk (Ala.) 24 So. 256. Page 32, sec. 11. — Scope of bill or petition. In the appointment the court acts only on well-established principles, and in that sense only can a receiver be said to be ex debito justitiw, whether the application be by a judgment creditor or anyone else. The court acts only on a proper case made out. Smith v. Post Dover & L. U. R. Co. 12 Ont. App. Rep. 288. A receiver will be granted without 9 §§ 12, 13 RECEIVERSHIPS— SUPPLEMENT. costs where the grounds are doubt- ful. Shepherd v. Murdoch, 2 Mol- loy. 531. In \\'ood V. Oai/nor, 1 Anibl. 395, the court refused to apiioint because there was no precedent for such ac- tion. The general rule is that a receiver is appointed only in clear cases when no adequate remedy at law exists. lumlin V. Vanhorn, 77 Ga. 315. In the appointment the court may impose conditions as to the payment of claims, and order that they be paid out of the earnings of the property. United States Trust Co. v. ^Vcio York W. 8. d B. It. Co. 25 Fed. Rep. 800. Pag-e 33, sec. 12. — Time when appointed. Where the debtor died after appli- cation for a receiver, and two days after, without reviving the action or bringing in the heirs, the receiver was appointed, held to be error. Ite Shcphard, L. R. 43 Ch. Div. 131. Page 33. -(b) Existence of 'property not prerequisite. That the debtor does not appear to have property is no ground for refusal to appoint; but where it ap- pears that the only property is a trust fund under a devise which the debtor is willing to apply upon the demand, the appointment will be re- fused. Dc Camp v. Dcnipsey, 10 N. Y. Civ. Proc. Rep. 210. The answer in a creditors' bill, that defendant has not property to the amount of .$100, is not a suffi- cient reason for refusing to appoint a receiver. Fuller v. Taylor, (1 N. J. Eq. 301 ; Fitzhugh v. Everingham, 6 Paige. 29. That there is no other property than an equity of redemption is not a defense. Bailey v. Lane, 15 Abb. Pr. 373, note. Page 35, sec. 13. — Must be a suit pending. An order appointing a receiver where no suit is pending concerning the property of which he is put in charge is void. Merchants' d Mfrs. 'Sat. Bank v. Kent Circuit Judge, 43 Mich. 292; Ex parte Mountfort, 15 Ves. Jr. 445; Re Hancock, 27 Hun, 575. The filing of the petition in an ac- tion between partners is a prerequi- site to the appointment of a receiver by the district court, under Tex. Rev. Stat. 1895, art. 1465. Webb v. Al- len, 15 Tex. Civ. App. 506. A cause cannot be pending, within Ohio Rev. Stat. § 5587, so as to au- thorize the appointment of a re- ceiver, before it has been commenced as provided in § 5035 ; and the ap- pointment of a receiver in a cause where a petition has been filed, but before a summons has been issued, is invalid. Dwelle v. Hinde, 8 Ohio 10 C. D. 177; Barber Bros. v. Manier, 71 iliss. 725; Hardy v. McClellan, 53 Miss. 507 ; Guy v. Doak, 47 Kan. 236. A receiver will not be appointed on a petition, but only on a bill, — when. Rice v. Tonnele, 4 Sandf. Ch. 508. An action may be pending, so that the court may appoint a receiver, though the notice or service was de- fective. Hellebush v. Blake, 119 Ind. 349. A motion for the appointment, where the order to show cause against the appointment is served before the commencement of the suit, is irregular. Kattenstroth v. Astor Bank, 2 Duer, 632. A receiver cannot be appointed preliminary to the commencement of suit, and without notice such ap- pointment is void. Jones v. Schall, MATTERS RELATING TO THE APPOINTMENT. § 15 45 Mich. 379 ; Merchants' d Mfrs. Nat. Bank v. Kent Circuit Judge, 43 Mich. 292. An agreement to receive property in part payment of a judgment, and an indorsed note for the balance, does not prevent the filing of a cred- itors' bill and the appointment of a receiver. Balde v. Smith, 5 Ch. Sent. 11. What court may appoint. The better practice in an applica- tion for a receiver after an appeal has been taken in the supreme court is to apply to the court of original jurisdiction. Coleman v. Fisher (Ark.) 48 S. W. 807. In Alabama, on appeal from the register the question comes before the chancellor as an original peti- tion, and he may hear other evidence. Etowah Min. Co. v. Wills Valley Min. & Mfg. Co. 106 Ala. 492. An application for the appoint- ment of a receiver in supplementary proceedings must be made to the judge who granted the order of ref- erence and appointed the referee. Ball V. Goodenough, 37 How. Pr. 479. Ordinarily a motion under the North Carolina Code for the appoint- ment of a receiver for a corporation must, at the option of the mover, be made before the resident judge of the district, or one assigned to the district, or holding the courts there- of by exchange. Worth v. Piedmont Bank, 121 N. C. 343. Page 37, sec. 15. — Grounds upon which jurisdiction is entertained. A receiver will not be appointed if any other remedy will afi"ord ample protection. Etoicah Min. Co. v. Wills Valley Min. d Mfg. Co. 106 Ala. 492. If made under statutory power it is with great caution. Brabrook Tailoring Co. v. Belding Bros. 40 111. App. 326. Where a city which is a stock- holder in a corporation is competent to prosecute all actions against it, and there are no funds to take charge of, the appointment is void and should not be made. Burnes v. Atchison, 48 Kan. 507. To justify the appointment it must appear that the possession of defendant was obtained by fraud, or that the income is in danger of loss from neglect, waste, or misconduct. Gilbert v. Block, 51 111. App. 510. Courts do not appoint receivers as a punishment for past dereliction or because of past dangers. In pass- ing upon the appointment of a re- ceiver for a solvent, prosperous cor- poration, something more must be shown than past misconduct. Orig- inal Vienna Bakery, C. d N. Co. v. Heissler, .50 111. App. 400. The appointment of a receiver for a railroad will not be made merely for default in payment of interest. Loss m_ust be shown. Union Trust Co. V. St. Louis, I. M. d S. R. Co. 4 Dill. 114; Buffalo Chemical Works V. Bank of Commerce, 79 Hun, 93; Drought v. Perceval, 2 Molloy, 502. ' A partner who upon dissolution leaves assets with his copartner to be applied to the payment of firm debts, which the latter assumes, is entitled to the appointment of a re- ceiver to prevent waste and misap- plication of the assets by the copart- ner. Allen V. Cooley, 53 S. C. 414. A receiver should not be appointed of a fund in the hands of the sheriff, on wliich a lien is claimed, unless it appears, as required by Ky. Civ. Code, § 298, that there is danger of its loss or removal. Combs v. Breathitt County, 20 Ky. L. Rep. 1247. A receiver may be appointed in a suit by a judgment creditor, over stock standing in the name of the debtor's wife, where there is reason- able ground to apprehend that it will be removed beyond the jurisdiction of the court, or will be lost. State Bank v. Gill, 23 Hun, 410. But the appointment is never in anticipation of something that may happen. Chadron Bkg. Co. v. Ma- honey, 43 Neb. 214. A receiver pendente lite will not 11 § 15 RECEIVERSHIjeS— SUPPLEMENT. be appointed in an action to recover possession of real property, where plaintiff's title is put in issue, in the absence of some special circum- stances rendering such an appoint- ment necessary to preserve plaintiff's rights. Seng f elder v. Hill, 16 Wash. 355. The power to appoint a receiver of a corporation will not be exercised except upon a grave necessity and a clear showing that the applicant has otherwise no adequate remedy, and is in danger of suffering irreparable loss. People's Invest. Co. v. Craw- ford (Tex. Civ. App.) 45 S. W. 738. Nor because an officer is in a posi- tion to betray it, where there is no evidence to establish any probability that he will so act. Young v. Rutan, 69 111. App. 513; Dozier v. Logan, 101 Ga. 173; Boston Invest. Co. v. Pacific Short-Line Bridge Co. 104 Iowa, 311. A receiver should not be appointed on the ground that a corporation is insolvent or in imminent danger of insolvency, when its assets are three times its stated indebtedness, and it is not shown that it is attempting fraudulently to dispose of its prop- erty. Miller v. Southern Land & Lumber Co. 53 S. C. 364. A receiver of property conveyed by an insolvent partnership to one of the firm creditors at an overvalua- tion, to hinder and defeat other creditors, should not be appointed ab- solutely without giving the pur- chasers the alternative of giving bond and security, where they are not alleged to be insolvent, and the property consists of a sawmill and fixtures and a large number of ani- mals used therewith, the care of which would be a great expense to a receiver. Stillwell v. Savannah Grocery Co. 88 Ga. 100. The appointment of a receiver is a common practice in case of the mortgage of tolls or income. Rug- gles V. Southern Min7iesota R. Co. 5 Chicago Legal News, 110, 17 Int. Eev. Rec. 29; Potts v. Warwick & B. Canal Nav. Co. 1 Kay, 142, 143; Tripp V. Chard R. Co. 11 Hare, 249, 17 Jur. 887; Dumville v. Ashhrooke, 3 Russ. Ch. 98; Imperial Mercantile 12 Credit Asso. v. Newry & A. R. Co. Ir. Rep. 2 Eq. 1 ; Knapp v. Williams, 4 Ves. Jr. 430, note a; Crewe v. Edleston, 1 De G. & J. 93. A judgment creditor of a railroad company, to whom the company's lands have been delivered under a writ of elegit, is entitled to a re- ceiver of the tolls and earnings. Kingston v. Cambridge R. Co. 41 L. J. Ch. N. S. 152. The appointment of a receiver for the purpose of preserving the future rents of real property, to abide the result of an action concerning the same, is not authorized where the ac- tion proceeds on the assumed owner- ship by plaintiff of the land and tlie profits thereof, and involves merely legal, as distinguished from equi- table, rights. San Jose Safe Deposit Bank of Savings v. Bank of Madera, 121 Cal. 543. A receiver may be appointed un- der § 24 of the garnishment act of Illinois. Myres v. Frankeiithal, 55 111. App. 390. A receiver of corporate stock pledged to secure a debt which is past due may be appointed in proceedings in aid of a garnishment against the pledgee, with the garnishee's con- sent, to sell the stock for payment of the amount due the pledgee and to impound the surplus to await the result of the original action against the debtor, where the latter is in- solvent. Kimbrough v. J. K. Orr Shoe Co. 98 Ga. 537. The court will refuse to appoint a receiver pending a plea to the ju- risdiction, but may order an im- mediate hearing on the plea. Ewing V. Blight, 3 Wall. Jr. 139. Nor will a receiver of the prop- erty of a railroad in Florida be ap- pointed in a suit in New York. Kit- tel V. Augusta, T. & G. R. Co. 78 Fed. Rep. 855. The power to remove a receiver and appoint another does not depend on notice to the stockholders. Hoyt V. Continental Ins. Co. 21 N. Y. Week. Dig. 145. An appointment may be made and an early sale of the property or- dered, to save forfeiture of the fran- chises of a corporation. Boston In- MATTERS RELATING TO THE APPOINTMENT. §g 16, 17 vest. Co. V. Pacific Short-Line Bridge Co. 104 Iowa, 311. On application of the seller of goods in an action to rescind a sale for fraud, the court may appoint a receiver, where the goods are in the hands of a sheriff, to secure the pay- ment of mortgages, and this, though the mortgagees are solvent. Ex- change Bank v. H. B. Claflin Co. 100 Ga. 040. The court will not appoint a re- ceiver of a partnership in supplemen- tal proceedings against the firm, when a receiver has already been ap- pointed in an action to dissolve the firm, where the former proceedings are bona fide. Price v. Price, 21 App. Div. 597. That mandamus will lie to compel a cemetery company to repair princi- pal approach to cemetery grounds will not prevent the appointment of a receiver to accomplish such object, where the duty to repair is clear and the latter method Avill be more ex- peditious. Houston Cemetery Co. v. Dreiv, 13 Tex. Civ. App. 536. As a condition of the appointment the court in a foreclosure proceeding may order the receiver to pay such outstanding debts for labor, supplies, equipments, and permanent improve- ments as are reasonable. Central Trust Co. V. Utah C. R. Co. 16 Utah, 12. In the absence of a cause of action entitling the plaintiff to recover, the court will not appoint a receiver an- cillary to a stockholder's suit. Peoples' Invest. Co. v. Crawford (Tex. Civ. App.) 45 S. W. 738. A court has no power to appoint a receiver of property out of its ju- risdiction. Baltimore Bldg. & Loan Asso. V. Alderson, 99 Fed. Rep. 142, 32 C. C. A. 542. Where the mortgage provides for the appointment upon the com- mencement of an action to foreclose, without regard to the solvency or in- solvency of the mortgagor or the value of the premises, and without notice, and it appears that the water taxes and insurance are unpaid, as well as the principal and interest, a receiver will be appointed. Fletch- er V. Krupp, 35 App. Div. 586. Page 45, sec. 16. — When jurisdiction not entertained. The court will not by mandamus compel the governor to appoint a re- ceiver to collect taxes. League v. Broionsville Taxing Dist. 29 Rep. 742, 752. Fed. Page 45, sec. 17. — Effects of appointment, (a) Settlement of disputes as to title. In an action where two parties claim possession and are interfer- ing with each other, appointment is proper. Hlaicacek v. Bohman, 51 Wis. 92; Corbin v. Thompson, 141 Ind. 128. The appointment of a receiver in the case of a disputed title to real property is in the judicial discretion of the court, and will be made before judgment in a proper case, although there is a tenant in possession to re- ceive the rents. Foxivell v. Van Orutten, 75 L. T. N. S. 311. The court since the passage of the English judicature act 1873, § 25, subs. 8, has jurisdiction to appoint a receiver in the case of a disputed title to real property. Ibid. Appointment where title involved and the party in possession is com- mitting waste. Collins v. Richart, 14 Bush, G21. A receiver may be appointed against the legal title, in a clear case. Lloyd V. Passingham, 16 Ves. Jr. 59. Where upon answer there is a strong presumption against the de- fendant's title, a receiver will be granted. Stitwell v. Williams, 6 13 §17 RECEIVERSHIPS— SUPPLEMENT. Madd. & G. 49, Same case on appeal, Jac. 280. Places property in custodia legis. Money or property in the receiv- ers' hands is in custodia legis. De- lany v. Mansfield, 1 Hogan, 234. But an order that a receiver shall be appointed to take charge of goods does not place such goods in custodia legis. Dutcher v. Culver, 24 j^Iinn. 584. Page 51. — (f) Leaves the rights of all parties in statu quo. The mere appointment determines no right existing at tlie time. Chase's Case, 1 Bland Ch. 200. The appointment of a receiver does not determine the rights existing, or affect the liens attaching to the prop- erty over which the i-eceivership ex- tends, — such as the lien of attorneys for services performed for a corpo- poration. Be Montgomery (N. J. Eq.) 30 Chicago Legal News, 237; Bennett v. Complete Electric Constr. Co. 8 App. Div. 301 ; Lowenherg v. Jeff cries, 74 Fed. Rep. 385 ; Hays v. Lycoming F. Ins. Co. 99 Pa. 621. But it has been held that the dis- solution of a corporation and the ap- pointment of a receiver dissolve at- tachments pending. Wilcox v. Con- tinental L. Ins. Co. 56 Conn. 488. And does not disable the corpora- tion from moving to vacate the at- tachment against property. Waver- ly Co. V. Worthington Co. 4 Misc. 447. The lien of an execution is unaf- fected. Re Muehlfeld & H. Piano Co. 12 App. Div. 492. And so with the lien of encum- brances. Bryant v. Bull, L. R. 10 Ch. Div. 153. Page 52. — (g) Presumption of appointment. There is no presumption that re- ceivers were appointed from the fact that they have acted. This presump- tion only applies to public officers. International & G. N. R. Co. v. Moore (Tex. Civ. App.) 32 S. W. 379. Page 53, — (h) Over what property. If the appointment of a receiver to take possession of the property of a natural person upon the complaint of the holder of matured chattel mortgages were proper in any case, it could only be for the property cov- ered by the mortgage, and could not include other property. State v. Union ^'at. Bank, 145 Ind. 537. The appointment of a receiver in an action to foreclose a mortgage •which does not purport to cover rents, issues, or profits does not cre- ate a lien upon a growing crop, un- der Cal. Code Civ. Proc. § 564, subd. 2. Locke V. Klunker, 123 Cal. 231; Ellis V. Vernon Ice, L. & TF. Co. 86 Tex. 109; Georgia v. Atlantic & O. R. Co. 3 Woods, 434 ; Roxbury v. The 14 Lotta. 65 Fed. Rep. 319; J .W. Dann Mfg. Co. V. Parkhurst, 125 Ind. 317; Arnold v. Weimer, 40 Neb. 216: Van Wagoner v. Paterson Gaslight Co. 23 N. J. L. 283. A lien on funds is followed into the hands of a receiver, — as, where a dividend has been declared and set apart for stockholders. Re Le Blanc, 14 Hun, 8. By adjudication of insolvency and the appointment of a receiver, the debts of creditors at large are fas- tened on its property. Graham But- ton Co. V. Spielmann, 50 N. J. Eq. 120. The duty to repair a section of a turnpike road in a receiver's hands will be shifted from the owner to the MATJERS RELATING TO THE APPOINTMENT. § 17 receiver by a decree placing a por- tion of the road in the hands of a re- ceiver, and directing him to collect the tolls. Lock v. FranlcUn <& H, Turnpk. Co. 100 Tenn. 163. The equitable rights of parties. The receiver takes the property subject to the equity of a mortga- gee to have the mortgage reformed so as to include all the property in- tended, though the mortgage may be invalid because not recorded. Ryder V. Ryder, 19 R. I. 188. The equity of § 3GC9, Ga. Code, ap- plies to the taking possession of property by a receiver under the or- der of court, as well as the le\'y of an execution. Georgia v. Atlantic d G. R. Co. 3 Woods, 434. The mere filing of a bill and serv- ice of process do not prevent a rail- road company from surrendering steel rails on its right of way but not attached to the road. Illinois Steel Co. V. Putnam, 30 U. S. App. 358, 68 Fed. Rep. 515, 15 C. C. A. 556. Gives plaintiff a lien. The filing of a creditors' bill and appointment of a receiver gave plain- tiffs a lien on the debtor's property prior to a subsequent bill against the lessee debtor, though the specific property was not mentioned in the first. Swift's Iron & Steel ^\orhs V. Johnson, 26 Fed. Rep. 828. Prevents creditors from prosecuting suits without leave of court. First Nat. Bank v. Dovetail Body & Gear Co. 143 Ind. 534; National State Bank v. Vigo County Nat. Bank, 141 Md. 352; Ellis v. Vernon Ice, L. & W. Co. 80 Tex, 109. Does not abate suits pending. Toledo, W. & W. R. Co. v. Beggs, 85 111. 80, 28 Am. Rep. 613; Kitt- redge V. Osgood, 161 Mass. 384. A claim against a receiver may be reduced to judgment in a suit pend- ing when appointment is made. Pine Lake Iron Co. v. La Fayette Car Works, 53 Fed. Rep. 853. The fact that a railroad has gone into the hands of a receiver is not an abatement of mandamus proceed- ings. People v. Barnett, 91 111. 422. Notice of appointment, effect of. The appointment of a receiver is notice to all parties to the cause, but is not notice to tenants who are not parties. As to such it is only notice from the time the order is served. Hensworth v. Maunsell, 1 Hogan, 170. An agent of an insurance com- pany, authorized to surrender pol- icies and return the unearned pre- miums to policy holders upon ten days' notice in writing, is not en- titled to do so after learning of the insolvency of the insurance com- pany and the intention to apply for the appointment of a receiver. American Casualty Ins. & S. Co. v. Arrott, 180 Pa. 1. Effect of, as to injunction. An injunction against a corpora- tion is binding on its receiver sub- sequently appointed. Steel v. Gor- don, 14 Wash. 521. And it is the duty of a receiver to see that the injunction -is obeyed. Stafford v. People, 85 111. 558. Effect as to statute of limitations. The appointment of a receiver does not set in motion the statute of lim- itations. Riddle v. First Nat. Bank, 27 Fed. Rep. 503; Harrison v. Dig- nan, 1 Connor & L. 376. Effect as to specific performance. Specific performance of a contract to lease the joint use of part of the track of a railroad is not prevented by the fact that receivers have been appointed of such road, where it does not appear that specific performance will cast a burden upon the ti"ack property, injurious or prejudicial to the interests of those interested therein. Chicago, B. & Q. R. Co. v. Union P. R. Co. 74 Fed. Rep. 989. Effect as to corporations. The mere appointment of a re- ceiver of an insurance company, and partial assumption and control of its affairs, are not a judicial recogni- tion of the due incorporation of the 15 § 18 RECEIVERSHIPS— SUPPLEMENT. company. People v. Van Rensse- laer his. Co. 38 Barb. 323. The mere appointment of a re- ceiver does not work a dissolution of a corporation. Steinhauer v. Col- mar, 1 1 Colo. App. 494 ; Del Valle v. Navarro, 21 Abb. N. C. 136. Or destroy the corporate entity. Second Xat. Bank v. New York Silk Mfg. Co. 11 Fed. Rep. 532. Or take from it the exercise of the corporate franchises. Notwithstand- ing the receivership the corpora- tion may still exercise its franchises, if in so doing the receiver is not in- terfered with. Ohio d M. R. Co. v. Russell, 115 111. 52; Aiihurn Button Co. v. Sylvester, 68 Hun, 401. And the sale of property by a re- ceiver does not prohibit stockhold- ers from electing directors. State, Atty. Gen., v. Merchant, 37 Ohio St. 251. Receivers of corporations are not purchasers for valuable considera- tion, but are voluntary assignees and personal representatives of the company. Van Wagoner v. Pater- son Gaslight Co. 23 N. J. L. 283. An order of a court having juris- diction, appointing a general receiv- er of a corporation for the purpose of liquidation, is an adjudication which operates as a sequestration of the property, — especially when it is plain that such is the intention and scope of the order. Temple v. Glas- gow, 42 U. S. App. 417, 80 Fed. Rep. 441, 25 C. C. A. 540. Suits hy and against. An act repealing a charter and ap- pointing receivers incapacitates the corporation from suing or being sued. Whitman v. Cox, 20 Me. 335. The effect of a general receivership of a corporation, accompanied by an injunction restraining its officers and agents from exercising any con- trol over its property or books, or from interfering with the control of the receivers, and enjoining any suits against the corporation, — precludes creditors from prosecuting claims to judgment without leave of the court. Temple v. Glasgow, 42 U. S. App. 417, 80 Fed. Rep. 441, 25 C. C. A. 540. Except in rare cases, stockholders cannot intervene where the corpora- tion is dissolved and a receiver is ap- pointed. People V. Cataract Bank, 5 Misc. 14. The appointment of a receiver for a national bank does not preclude a stockholder from maintaining an ac- tion against the directors for their fraud or negligence in allowing the publication of a false statement of the condition of the bank, by which the plaintiff was induced to purchase his stock. Houston v. Thornto7i, 122 N. C. 365. Discharges officers and servants of corporation. The order of court appointing a receiver and manager of a railroad company has the effect of a notice discharging the company's officers and servants. Reid v. Explosives Co. 56 L. J. Q. B. N. S. 68 ; Rochester V. Bronson, 41 How. Pr. 78, 82. Terminates stockholders' liability, when. The appointment of a receiver for a building and loan association ter- minates the liability of stockholders for monthly dues. Buist v. Bryan, 44 S. C. 121, 29 L. R. A. 127. Makes funds of bank trust fund. Riddle v. First Nat. Batik, 27 Fed. Rep. 503. Disables corporation from assigning. After a receiver has been ordered an insolvent corporation has no right to assign portions of its rent and personal estate. It would be a fraud upon the process and proceedings of the court. Leavitt v. Tylee, 1 Sandf. Ch. 207. Page 54, sec. 18. — Courts exercising jurisdiction. For the provisions of N. C. Code, §§ 338, 339, enlarging jurisdiction in the appointment of receivers, see 16 John L. Loper Lumber Co. v. Wal- lace, 93 N. C. 22. Prior to April 26, 1893, the court MATTERS RELATING TO THE APPOINTMENT. § 18 of common pleas of Pennsylvania had no jurisdiction to appoint re- ceivers. Fraternal Guardian's As- signed Estate, 159 Pa. 603. The English judicature act 1873, § 25, subs. 8, enables any judge of the high court to appoint a receiver of a decedent's estate, notwithstand- ing the absence of lis pendens; but applications for such order, being on the way to probate proceedings, are properly made in the probate divi- sion, and, if made elsewhere, will not be encouraged. Bearing v. Brooks, 54 L. J. Ch. N. S. 694. The appointment of a receiver of a natural person at the instance of a creditor, not in an auxiliary pro- ceeding, but upon a complaint in which the appointment is the sole re- lief sought, is not authorized by the practice under the common law or by the Indiana statutes. State v. Union Nat. Bank, 145 Ind. 537. Circuit courts are authorized by W. Va. Code, chap. 53, §§ 58, 59, in proper cases therein set forth, to ap- point receivers for and wind up the aflfairs of foreign corporations which have done business, acquired prop- erty, and contracted debts in the state. Sicing v. Bentley & G. Fur- niture Co. (W. Va.) 31 S. E. 925. The jurisdiction conferred upon the circuit court by Mo. Rev. Stat. 1889, §§ 2790-2792, to appoint re- ceivers for business corporations at the instance of creditors in certain cases, may be exercised by the judge in vacation, in view of § 2792, pro- viding that the jurisdiction is to be "exercised as in ordinary cases." Glover v. St. Louis Mut. Bond In- vest. Co. 138 Mo. 408. The previous execution of an as- signment for creditors by a corpora- tion does not defeat the jurisdiction of the court, under the Texas stat- ute, to appoint a receiver for an in- solvent corporation. Milam County Co-Op. Cotton & M. Alliance v. Ten- nent Stribling Shoe Co. (Tex. Civ. App.) 40 S. W. 331, Rehearing De- nied in 40 S. W. 1027. N. C. Rev. Code, chap. 26, §§ 5, 6, oust the former equity jurisdiction to appoint receivers at the instance of creditors. The statutory remedy is exclusive. Von Glahn v. De Ros- set, 81 N. C. 467. State courts have jurisdictions of actions against receivers of the Fed- eral court. Schonberg v. Cowen, 7 Ohio Dec. 522. The jurisdiction of a state court which has appointed a railroad re- ceiver, to direct him as to the wages to be paid for operating the road within that state, is not defeated by the fact that the employees in oper- ating the road cross the state bound- ary and incidentally perform some services in another state, although the receivership is ancillary to a re- ceivership in such other state. Guar- antee Trust d S. D. Co. v. Philadel- phia, R. & N. E. R. Co. 69 Conn. 709, 38 L. R. A. 804. A receiver in a Federal court, who voluntarily goes into a state court, cannot question the right of that court to determine the controversy between himself and the other party. Grant v. Buckner, 172 U. S. 232, 43 L. ed. 430. A state court has jurisdiction of an action against a purchaser of a railroad under a mortgage fore- closure to recover for personal in- juries sustained in the collision of two trains while the road was being operated by receivers appointed by the United States circuit court, where the decree of that court di- recting foreclosure of the railroad required the purchaser as a part of the purchase price, and in addition to the sum paid, to pay all liabilities incurred by the receivers before de- livery of possession of the property. Atchison, T. & S. F. R. Co. v. Cun- ningham, 59 Kan. 722. A state court will not direct the payment into court of the funds in the hands of a relief department of a railroad company, for which re- ceivers have been appointed by a Federal court, with a provision that they shall continue the operation of the features of such relief depart- ment in accordance with the regula- tions adopted by the officers of the company. Baltimore & 0. R. Co. v. Flaherty, 87 Md. 102. A Federal court will not appoint a receiver and direct the possession 17 § 18 RECEIVERSHIPS— SUPPLEMENT. of property in the possession of a state court under attachment, though the attachment proceedings are defective. Southern Bank d T. Co. V. Folsom, 43 U. S. App. 713, 75 Fed. Rep. 929, 21 C. C. A. 508; Val Blatz Brewing Co. v. Walsh, 84 Fed. Rep. 5. A circuit court of the United States sitting in one district has power to appoint a receiver of the property of a railroad company in another district, for the purpose of preserving it pending litigation, where a proceeding to foreclose a mortgage thereon has been insti- tuted. Trinity & S. B. Co. v. Brown, 91 Tex. G73. Jurisdiction of a United States court to appoint is not defeated by the fact of incipient suits in a state court. Buck v. Piedmont & A. L. Ins. Co. 4 Fed. Rep. 849. A receiver defendant has a right to remove a cause to the United States court when he is appointed over a national bank. He acts as receiver under the laws of the United States, and the removal act there- fore applies. Soicles v. Witters, 43 Fed. Rep. 700. The appointment of a receiver does not deprive a bankrupt court of ju- risdiction. Re Independent Ins. Co. Holmes, 103 ; Re National L. Ins. Co. 6 Biss. 35. Federal courts of another state will not refuse to entertain garnish- ment against a receiver on the pe- tition of citizens within its juris- diction, when no objection to the ju- risdiction on other grounds exists. Central Trust Co. v. Chattanooga R. d C. R. Co. 68 Fed. Rep. G85. The filing of a bond and its ap- proval by a state court, as required by the state statute in case of an as- signment for creditors, is not a ju- dicial proceeding which gives the state court jurisdiction of the prop- erty, so as to prevent a Federal court from appointing a receiver for it. Watson V. Bettman, 88 Fed. Rep. 825. In case of conflict between the di- rections of the primary court and one of ancillary jurisdiction, to a re- ceiver, the directions of the primary 18 court will control in matters of gen- eral administration, and those of the local court in local administration; and the question as to what shall be done with personal property within the jurisdiction of the local court and encumbered with a local lien is pre-eminently a matter of local ad- ministration. Fletcher v. Uarney Peak Tin-Min. Co. 84 Fed. Rep. 555. The infirmity in the jurisdiction of a suit to foreclose a mortgage up- on the property of a corporation, in which a receiver has been appointed, arising from the collusion of the original parties, which would other- wise require dismissal of the suit, will not deprive the court of power to take cognizance of intervening petitions, determine the validity of the claims asserted, and give due ef- fect to valid claims by affording the jietitioners appropriate relief. Elec- trical Supply Co. V. Put-In-Bay Watenvorks, Light d R. Co. 84 Fed. Rep. 740. The receiver must be appointed by the judge, and not the clerk. Parks V. Sprinkle, G4 N. C. 637. And by the court, and not the chancellor. Delaicare Bay & C. M. R. Co. V. Markley, 45 N. J. Eq. 139. A receiver may be appointed in an- other district than that in which supplementary proceedings are pend- ing. Jacohson v. Doty Plaster Mfg. Co. 32 Hun, 43G. The general rule in regard to con- current jurisdiction, that the court first obtaining control excludes the other, does not apply to a case where an insignificant portion of the prop- erty is taken possession of, and the case dismissed befoi'e suit in the otlicr court. Liggett v. Glenn, 4 U. S. App. 438, 51 Fed. Rep. 381, 2 C. C. A. 280; Bell v. Ohio Life d T. Co. 1 Biss. 260. Where a United States circuit court has appointed receivers for that part of a line of road within its jurisdiction, another court with- in whose jurisdiction a part of the line runs may appoint the same re- ceivers, where the parts of the road are not capable of separate manage- ment. Dillon V. Oregon Short Line d V. N. R. Co. 66 Fed. Rep. 622. MATTERS RELATING TO THE APPOINTMENT. § 18 The right of a creditor in a court of equity to the appointment of a re- ceiver is not taken away by the Illi- nois statute conferring power on the state auditor to file a bill and procure such appointment. People V. Globe Sav. Bank (111. C. C.) 29 Chicago Legal News, 396, 14 Nat. Corp. Eep. 723, Distinguishing Peo- ple V. Weigley, 155 111. 491. A court of equity has no jurisdic- tion to appoint a receiver for the col- lection of taxes of a school district where the trustees are unable to get anyone to serve. Grand Rapids School-Furniture Co. v. School Dist. A'o. 29, 19 Ky. L. Rep. 1610. A court of equity has power to ap- point a receiver to wind up a part- nership and sell its real estate, though part of it lies in another state. Dunlap v. Byers, 110 Mich. 109. A court of equity having jurisdic- tion of a railroad in a foreclosure suit may order the payment of a ven- dor's lien for property taken by the road, out of earnings in the hands of the receiver, or out of the pro- ceeds of the sale of the road, or, in the last extremity, it may order a separate sale of the portion of the road subject to the lien. Wheeling Bridge & T. E. Co. v. Reymann Breio- ing Co. 90 Fed. Rep. 189, 32 C. C. A. 571. Courts of equity by virtue of their general equitable jurisdiction will not appoint a receiver of a corpora- tion, and assume control and man- agement of its affairs, at the suit of a stockholder alleging fraud, mis- management, and collusion on the part of the corporate authorities, or ultra vires acts of the directors or of the corporation itself, but in such cases will limit the redress granted to the specific wrongs charged, and will go no further than to enjoin or forbid the misconduct complained of. People's Invest Co. v. Craw- ford (Tex. Civ. App.) 45 S. W. 738. A court of law has no power to ap- point. Myres v. Frankenthal, 55 111. App. 390; Smith v. Los Angeles County Super. Ct. 97 Cal. 348. The supreme court of a state will not take cognizance of an alleged wrongful diversion of the income ol a railroad during a receivership ap- pointed by the United States dis- trict court, but the complainant should seek redress in that court, or in its appellate tribunal. Kurtz v. Philadelphia & R. R. Co. 187 Pa. 59. The appellate court will not ap- point or direct the appointment of a receiver upon reversing a judgment dismissing a bill by creditors to reach the property of their debtor, where the property is already in the possession of a receiver the validity of whose appointment is attacked in the action. Albion Malleable Iron Co. V. First Nat. Bank, 116 Mich. 218. Power of the court. The powers given the receiver will be enlarged from time to time when necessary. Ohio Turnpike Co. v. Eotvard, I West. L. J. 216. The court may authorize the re- ceiver of a railway to allow an elec- tric railroad company to cross its tracks in the interest of the public. Steioart v. Wisconsin Cent. Co. 89 Fed. Rep. 617. The court has no power to order the sheriff to deliver to its receiver treasury warrants seized by him un- der a writ of replevin in a suit by a person not a party to the suit in which the receiver was appointed, such warrants not being in the cus- tody of the court. Elwell v. Good- now, 71 Minn. 383. A court of equity having posses- sion, through its receiver, of a rail- road system, will not prevent mort- gagees from filing suits to foreclose their mortgages on the property pending proceedings for a reorgan- ization of the road, if the litigation over the reorganization will require a month or more for its determina- tion. Mercantile Trust Co. v. Balti- more & 0. R. Co. 89 Fed. Rep. 606. The court appointing a receiver of a corporation has no authority sum- marily to order one not a party to the action to deliver to the receiver property claimed to belong to the corporation, as he has a riglit to have his title determined in an appropri- ate action; and the fact that the ac- 19 ^ 19 RECEIVERSHIPS— SUPPLEMENT. tual possession was in the plaintiff in the action in which the receiver was appointed is not material, if such possession was not in his own right. Htuparich Mfg. Co. v. tian Francisco Super. Ct. 123 Cal. 290. The court should not direct a re- ceiver to expose the property to the hazard incident to the conduct of a precarious business, except so far as i^ necessary to preserve tlie existing status and maintain the rights of the parties. Bigbee v. Summcrour, 101 Ga. 201. The district court has authority, either on its own motion or that of defendants, to require an accounting from a receiver appointed in the ac- tion, and a return of the property to the owners after a decision of the su- preme court in their favor. Harnm V. J. Stone d Sons Livestock Co. 13 Tex. Civ. App. 414. Mere oral directions by the judge who appointed a receiver of a cor- poration, which were never reduced to writing, may be disregarded by another judge in passing upon the acounts of the receiver and his claims to allowance for compensa- tion and expenditures, — especially where the appointing judge had such an interest as to disqualify him. United States Nat. Bank v. National Bank, U Okla. 1G3. The court which appointed a re- ceiver of a corporation may render a judgment directing the sheriff to sell land previously conveyed to the cor- poration, to satisfy judgments against the corporation's grantor, upon determining in an action by the judgment creditors that the convey- ance to the corporation was fraudu- lent as to them; and it is not bound to leave the property in the hands of the receiver and direct him to sell the same in the receivership action. Cass V. Sutherland, 98 Wis. 5.31. The court having the custody of the property of an insolvent corpora- tion may, on the bringing of an ac- tion to foreclose a mortgage, order a sale by the receivers of all the as- sets of the corporation not embraced in the mortgage. Kurtz v. Phila- delphia & R. R. Co. 187 Pa. 59. Page 56, sec. 19. — Conflict of jurisdiction. The enactment of the Federal bankruptcy law of July 1, 1898, did not suspend the right of a state court to appoint a receiver for an in- solvent corporation under state laws, when it had not been adjudged a bankrupt under the law of Congress. State, Strohl, v. King County Super. Ct. (1899) 20 Wash. 545, 45 L. R. A. 177. But the appointment of a receiver by a state court will not prevent subsequent bankrupt proceedings in the Federal court. Re Independent Ins. Co. (1872) Holmes, 103, Affirm- ing 2 Low. Dec. 97 ; Re Safe Deposit d- Sav. Inst. (1872) 7 Nat. Bankr. Reg. 392; Re Green Pond R. Co. (1870) 13 Nat. Bankr. Reg. 118; Relational L. Ins. Co. (1874) 6 Biss. 35: Re Xoonan (1873) 3 Biss. 491: Thornhill v. Bank of Louisiana (1870) 1 Woods, 1, Affirming (1870) 3 Nat. Bankr. Reg. 435 20 As to the effect of the appoint- ment of a receiver as an act of bank- ruptcy, see note in 45 L. R. A. on page 190. A court in which a foreclosure suit is brought, and which has en- tered a final decree adjudging fore- closure and sale by a special master, has such jurisdiction over the specif- ic property as to entitle it to hold exclusive jurisdiction and {x»ssession thereof to the exclusion of any other court and of a receiver appointed thereby after such decree and before the sale, so as to render the sale sub- sequent to the appointment of the receiver valid. McLane v. Holland Trust Co. 52 U. S. App. 599, sub nom. Holland Trust Co. v. Interna- tional Bridge d Tramwag Co. 85 Fed. Rep. 805, 29 C. C. A. 400. MATTERS RELATING TO THE APPOINTMENT. §§ 20, 21 Page 58, sec. 20. — Scope of jurisdiction. Jurisdiction must be exercised in good faith and for the common bene- fit of all. Re Maskelyne British Typeioriter Co. [1898] 1 Ch. 133, 77 L. T. N. S. 579. Page 59, sec. 21. — "Who appointed. As a rule hut one receiver appointed. As a general rule, subject to the discretion of tlie court, but one re- ceiver should be appointed over the same property. Where a receiver has been ap- pointed in a creditors' bill, and sub- sequently on a bill to foreclose the same property a receiver is asked, the receivership in the former should be extended. Myrick v. Selden, 36 Barb. 15; Lloyd v. Chesapeake, 0. <& 8. W. R. Co. 65 Fed. Rep. 351. After consolidation of causes, a receiver in the former may be made receiver in the consolidated suit. Central Trust Co. v. Wabash, St. L. & P. R. Co. 23 Fed. Rep. 863. After the appointment of a re- ceiA'er of a street-railroad company the court will not appoint a separate receiver for one of its branches. Clapp V. Interstate Street R. Co. 61 Fed. Rep. 537. As a general rule a receiver ap- pointed in a prior suit should not be replaced by the same court for the same property. This rule has its exceptions, however. State v. .Jacksonville, P. & M. R. Co. 15 Fla. 201. The appointment of a receiver in a supplementary proceeding is not a bar to the appointment in a credit- ors' proceeding; nor need the same person be appointed. State Bank v. Gill, 23 Hun, 410. A receiver may be appointed by one court, though a different receiver has been previously appointed by an- other court, and particularly so where there is a reasonable suspicion of collusion in the former appoint- ment. Young v. Aronson, 27 Fed. Rep. 241. Extension of receivership justifies additional security or removal of. Wise V. Ashe, 1 Ir. Eq. Rep. 210. On motion to extend, the only par- ties to be heard are the petitioner and debtor. Walsh v. Walsh, 11 Ir. Eq. Rep. 607. A receiver will not be appointed over the possession of another re- ceiver. In such case the former re- ceivership should be extended. Valle v. O'Reilly, 1 Hogan, 199. Two receivers of the same property should not be appointed; and if an attempt is made in a second suit the first receiver or the creditors he rep- resents should be made parties. Bank of Mutual Redemption v. Sturgis, 9 Bosw. 608. A receiver in one suit may be com- pelled to serve in a second suit about the same property, and on refusal may be removed from the first. Cagger v. Howard, 1 Barb. Ch. 368. N. Y. Code Civ. Proc. § 2466, pro- hibits more than one receiver for the same debtor, but provides for an ex- tension of the receivership already made. Garfield Nat. Bank v. Bost- wick, 39 N. Y. S. R. 358. The object of the 139tli rule in New York, relative to the appoint- ment of the same person as receiver in different suits over the same prop- erty, was to save expense and con- flict between receivers. Cagger v. Houard, 1 Barb. Ch. 368. But the appointment of a second receiver is within the discretion of the court. Thau v. Bankers d M. Teleg. Co. 24 Jones & S. 588. The rule (which is of general ap- plication) has been laid down that two receivers will not be appointed unless necessary, and they must be not interested in the litigation, nor partisans of any of the litigants, nor nonresidents. Meier v. Kansas P. R. Co. 5 Dill. 470. 21 § 21 RECEIVERSniPS— SUPPLEMENT. Receiver should be disinterested. An interest in the business of a corporation is not a necessary quali- fication of a receiver of the corpora- tion, but, on the other hand, lack of interest is a strong recommendation. Baync v. Brewer Potter y Co. 82 Fed. Rep. 391. And the best party. The best person should be ap- pointed without reference to who mav suggest his name. Lespinasse v. Bell, 2 Jac. & W. 436. Plaintiff's solicitor not appointed. The law partner of plaintiff's solicitor should not be appointed, even by consent. Merchants d Mfrs. 2\^at. Bank v. Kent Circuit Judge, 43 Mich. 292. Officers of a corporation not. Neither party, counsel, nor officer will be appointed receiver of a cor- poration. Finance Co. of Pennsyl- vania V. Charleston, C. & C. R. Co. 45 Fed. Rep. 430. The secretary of an insolvent sav- ings bank is not a proper person to be appointed, where he has made false statements as to its solvency, and verified the same. People v. Third Avenue Sav. Bank, 50 How. Pr. 22. The treasurer of a railroad com- pany may be appointed receiver. Houston V. Rcdwine, 85 Ga. 130. In England the general rule is that the directors or secretary, or some of them, of a railway, will be appointed managers. Re Manchester & M. R. Co. L. R. 14 Ch. Div. 645. The officers of a corporation may be appointed receivers. Ralston v. Washington & C. River R. Co. 65 Fed. Rep. 557. Party to suit. Being a party to the suit does not disqualify a person from being re- ceiver. People, Gore, v. Illinois Bldg. & L. Asso. 56 111. App. 642. A solvent partner who is a party may be appointed receiver of part- nership property without compensa- tion. Ex parte Stoveld, 1 Glyn & J. 303. 22 A peer. A peer will not be appointed. Atiy. Gen. V. Gee, 2 Ves. & B. 208. Tritstee. The position of receiver is incom- patible with the position of trustee, in bankruptcy. Re Stuyvesant Bank, 5 Ben. 566. A trustee of an estate will not be appointed receiver if another can be procured. Hibbert v. Jenkins, Mss., quoted in Sykcs v. Hastings, 11 Ves. Jr. 363; v. Jolland, 8 Vea. Jr. 72. Assignee. Eichbcrg v. Wickham, 21 N. Y. Supp. 647. An assignee for the benefit of creditors should not, after attach- ment of the property and in a suit to which he is a party, be appointed a receiver of it, since under Mansf. (Ark.) Dig. § 5290, an interested party is not eligible to such appoint- ment. Tait v. Carey (Ind. Terr.) 49 S. W. 50. Clerk of court The court may appoint the clerk of court receiver, and his sureties on his official bond will be liable. ^yatcrs V. Melson, 112 N. C. 89. One not acquainted with business. A receiver, if otherwise competent, is not disqualified because he is not acquainted with all the details of the mechanical work of a railroad plant. Farmers' Loan d T. Co. v. Cape Fear d Y. Valley R. Co. 62 Fed. Rep. 675. Resident. A receiver of a corporation ap- pointed by a United States circuit court need not necessarily be a resi- dent of the district in which the ap- pointment is made. Baync v. Brewer Pottery Co. 82 Fed. Rep. 391. Citizen. Citizenship of a person is not a disqualification for receivership. Farmers' Loan d T. Co. v. Cape Fear d Y. Valley R. Co. 62 Fed. Rep. 675. The appointment of an improper person does not render the appoint- MATTERS RELATING TO THE APPOINTMENT. § 22 ment void, or raake him the agent of the corporation. San Antonio & A. r. R. Co. V. Adams, 11 Tex. Civ. App. 198. Receiver not a public officer. Cohnen v. Sioetinie, 105 Mich. 643. Consent. Consent to the appointment of a particular person should not be made a rule of court. Leach v. Tis- dal, 4 Ir. Ch. Eep. 209. Only parties to a suit can object to appointment. Creed v. Moore, 4 Ir. Eq. Rep. 684. Page 63, sec, 22. — Form and scope of order. A decree directing that the prop- erty of a corporation be turned over to its receiver should protect the right of its manager to have the secret of certain manufacturing processes owned by him preserved inviolate. Wilt v. Reed Electric Co. 187 Pa. 424; Webb v. Allen, 15 Tex. Civ. App. 506. Page 66.- [h) Collateral attack. The appointment, if made in a court of competent jurisdiction, and in an action where the power to ap- point exists, cannot be collaterally attacked. Andreius v. Steele City Bank (Neb.) 9 Am. & Eng. Corp. Cas. N. S. 452, 77 N. W. 342 ; Carroll v. Pacific 2\ at. Bank, 19 Wash. 639; Roby V. Title Guarantee & T. Co. 166 111. 336; Comer v. Brady, 83 Ala. 217. A creditor who has brought suit against a private corporation in a Federal court, and caused its prop- erty to be attached and sequestered on a vendor's lien, which property is subequently ordered to be surrend- ered to a receiver previously ap- pointed in a state court, cannot suc- cessfully assail the order of appoint- ment for informality in the proceed- ings, without asking for judgment on its demand, or disclosing a well- grounded claim for damages against the receiver personally. Remington Paper Co. v. Watson, 49 La. Ann. 1296. The vendee of a receiver cannot, in the absence of fraud or mistake, deny the validity of the appointment, where possession has been taken by the receiver. Stclzer v. La Rose, 79 Ind. 435 ; Jay v. De Oroot, 17 Abb. Pr. 36, note; Storm v. Ermantrout, 80 Ind. 214. Under N. Y. Rev. Stat. vol. 2, p. 463, § 36, it was held that if the ap- pointment was binding on the cor- poration no one else could question it. Whittlesey v. Frantz, 74 N. Y. 456 ; Peters v. Carr, 2 Dem. 22 ; Bar- nett V. Nelson, 54 Iowa, 41, 37 Am. Rep. 183; Thompson v. Greeley, 107 Mo. 577 ; Elderkin v. Peterson, 8 Wash. 674. The appointment of a receiver by a Federal court in an action to fore- close a mortgage is absolutely void and subject to collateral attack, where the court never acquired any jurisdiction of the cause. Thurber V. Miller (S. D.) 75 N. W. 900. The legality of the appointment of a receiver made in open court, in the presence of the adverse party, without objection or exception, can- not be raised by motion to set it aside. Gray v. Oughton, 146 Ind. 285. The appointment of a receiver can- not be revoked or the decree modified upon the application of a stranger to the action, although he has ac- quired rights adverse or superior to those of the receiver. Wright v. Weisel, 19 App. Div. 630. Where parties stipulate that a re- ceiver acted as such and should be protected, the validity of the ap- pointment cannot be questioned. Kelsey v. Sargent, 40 Hun, 150, 104 N. Y. 663. 23 § 22 RECEIVERSHIPS— SUPPLEMENT. Page 69. — (j) Vacation of. An ex parte order for a receiver- ship of property by a judge in vaca- tion should also appoint a very early day for the showing of cause against the order. Utatc, tSt. Louis, K. <£ S. K. Co., v. Wear, 135 Mo. 230, 33 L. R. A. 341. An early opportunity to combat and, if desired, to review an ex parte appointment of a receiver, is con- templated by Mo. Laws 1895, p. 91, providing for an appeal and the very summary determination thereof, from any order refusing to revoke, modify, or cliange an interlocutory order api>ointiiig a receiver. State, 8t. Louis. K. fC- 8. K. Co., v. Wear, 135 Mo. 230, 33 L. R. A. 341. A motion to set aside an order ap- pointing a receiver is made to the court, and not the judge. Lippin- cott v. West7ay, G N. Y. Civ. Proc. Rep. 74. Page TO. — (k) Appeal. A receiver cannot be appointed to take and keep possession of land, and to collect the rents, issues, and profits thereof, from the date of a judgment for such rents, until the further or- der of the court, in order to carry such money judgment into effect, where such judgment has been stayed by a proper bond on appeal. San Jose Safe-Deposit Bank of Sav- infjs v. Bank of Madera, 121 Cal. 543. The appointment will not be inter- fered with on appeal, where it ap- pears that there is not a clear pre- ponderance of evidence against the appointment. Cameron v. Grove- land Iniprov. Co. 20 Wash. 169. Abuse of discretion must be shown to justifj' appellate review of the ap- pointment of a receiver. Armstrong v. Alabama Fertilizer Co. 105 Ga. 515. In a foreclosure action a bond con- ditioned in accordance with Neb. Code Civ. Proc. § 077, that the appel- lants will prosecute an appeal with- out delay, and will not during its pendency commit or suffer waste upon the premises, will not super- sede an order appointing a receiver for the property. Lowe v. Riley (Neb.) 77 N. W.'758. As to the effect of supersedeas, see Downing v. Dunlap Coal Co. 93 Tenn. 221. An order appointing a receiver upon conflicting affidavits will not be disturbed on appeal. Houston Cemetery Co. v. Drew, 13 Tex. Civ. App. 536. 24 A stockholder and officer of a cor- poration sued for an accounting for mismanagement, in which suit the corporation is a defendant, has no right of appeal from the order ap- pointing a receiA-er under Ind. Rev. Stat. 1894, § 1245. McFarland v. Pierce, 151 Ind. 546. An order that, pending appeal, the receiver should not sell or distribute the property that might come into his hands, pendingappeal or until the further order of court, is as strong a stay order as the court will make. People V. North River Sugar Ref. Co. 23 Abb. N. C. 311. The lien acquired by the appoint- ment of a receiver of a debtor's prop- erty is not abrogated by an appeal. Stant0)i V. Heard, 100 Ala. 515. A defendant who fails to appeal from an order of appointment can- not afterwards claim that the ap- pointment was irregular. Saunders V. Kempner (Tex. Civ. App.) 32 S. W. 585. On an appeal from the appoint- ment of a receiver, all irregularities not brought up are waived. Tinkey V. Langdon, 60 How. Pr. 180. Pending appeal a receiver was re- fused, no danger appearing. Munic- ipal Comrs. V. Lockhart. Ir. Rep. 3 Eq. 515. When appeal is taken from an or- der of appointment, and supersedeas is granted, the custody does not pass to the receiver pending appeal. Cook v. Cole, 55 Iowa, 70. A supersedeas bond on appeal un- MATTERS RELATING TO THE APPOINTMENT. § 22 der Mo. Rev. Stat. 1SS9, § 2249, from an order overruling a motion to va- cate the appointment of a temporary receiver to preserve and manage a railway line pending an action, re- leases the property that has reached the hands of the temporary receiver by way of execution of the original order of appointment. State, St. Louis cG K. R. Co., v. Eirzel, 137 Mo. 435. An order appointing a receiver will be affirmed where an appeal is taken by one having no interest aif ected thereby ; but such affirmance will not bo binding upon any interested party. Sherwood v. Prussing (111. App.) 1 Chic. L. J. Wkly. 179. An attempted appeal to the Texas supreme court from a judgment of the Texas court of civil appeals af- firming a judgment so far as it grants a divorce, but reversing and remanding the case for a new trial as to property rights, does not de- prive the trial court of jurisdiction to appoint a receiver of the prop- erty, even if an effectual appeal would have that result, since the jurisdiction of the court of civil ap- peals is final as to both branches of the case. Stone v. Stone (Tex. Civ. App.) 43 S. W. 567. On appeal to review the appoint- ment of a receiver, the only question to be considered is the jurisdiction of the court to make the appoint- ment, and not whether it properly exercised its discretion. State, In- dependent Dist. Teleg. Co. v. Second Judicial Dist. Ct. 15 Mont. 324, 27 L. R. A. 392. On appeal from an order appoint- ing a receiver the court must deter- mine whether the order was author- ized by the law and facts, and is not limited to the question of jurisdic- tion. Roberts v. Washington Nat. Bank, 9 Wash. 12. On appeal the court will not dis- turb the appointment of a receiver where the evidence is conflicting and there is no abuse of discretion. Bliley v. Taylor, 86 Ga. 163. Page 72. — (1) Appeal from; order; rents and profits. In a foreclosure suit where an or- der appointing a receiver was super- seded by a bond given by the appel- lants to account for rents and profits if the receivership order should be affirmed, the court may, upon an or- der to show cause issued in the fore- closure case after such affirmance, enter a judgment against the appel- lants for the rents and profits of the premises during the time the re- ceivership was suspended. Lowe v. Riley (Neb.) 77 N. W. 758. Successor to dead receiver. Where the order appointing a re- ceiver is in force the refusal to ap- point a successor on the death of the first is error. Smith v. Harris, 135 Ind. 621. On the death of a receiver the new receiver will be authorized to con- tinue an action by supplemental complaint. Palmer v. Murray, 18 How. Pr. 545. On the death of a receiver the property vests in the court ; and on the death of the debtor a new re- ceiver may be appointed. Nicoll v. Boyd, 90 N. Y. 516. Validity; not heard on appeal, when. Where the propriety of an appoint- ment is not raised in the court below it cannot be raised on appeal. Bliley V. Taylor, 86 Ga. 163. Who may attack. Irregularity in the appointment of a receiver is not to be raised in an action by the receiver. Orccu v. Bookhart, 19 S. C. 466. And irregularity in the appoint- ment is no ground for defendant's objecting to an examination. Thomas v. Gartner, 97 Mich. 608; Cf.IJoicardv. Palmer (Mich.) Walk. Ch. 391 30 § 28 RECEIVERSHIPS— SUPPLEMENT. Page 73, sec. 23. — Bond; sureties on; liability on. Sureties on a bond reciting the ap- pointment of the principal obligor as receiver of a corporation, and con- ditioned for the faithful discharge of his duties as such, are estopped to deny his appointment, where the riglit of the court to make the ap- pointment existed, although the ap- pointment at the time was improper because of the insulficiency of the pe- tition asking therefor. Thompson V. Denner, IC App. Div. IGO, Citing Cutler V. Dickinson, 8 Pick. 385; Distinguishing Mittnacht v. Keller- mann, 105 N. Y. 409. A surety on a receiver's bond who purchases from the receiver, for a sum much less than its real value, the real estate of the latter's ccstuis que trust, which he has no lawful right to sell, is not a purchaser of the land in good faith. Donahue v. Quackcnbush (Minn.) 77 N. W. 430. The appointment of a receiver without requiring a bond of the com- plainants is invalid, since Ala. act February 18, 1895, providing that a bond shall be required of the com- plainant whenever application shall be made for a receiver, repeals by implication Ala. act December 14, 1894. in so far as the latter invested the appointing officer with a discre- tion in the matter of requiring such bond. David v. Levy (Ala.) 24 So. 589. An independent action may be maintained to ascertain and enforce the liability of sureties on the bond of a receiver. Black v. Gentery, 119 N. C. 502. The filing of a bond duly approved, which by an order appointing a re- ceiver of a corporation is made a con- dition of his taking possession of the property, is not sufficiently shown for the purposes of N. Y. Code Civ. Proc. § 082, authorizing any person who has acquired a lien upon or in- terest in an attachment debtor's property after attachment to move to vacate or modify the attachment, by an affidavit of such filing by the managing clerk of the receiver's at- torneys, which does not disclose facts or circumstances justifying an 26 inference that he had personal knowledge of the fact. Belmont v. Si(iua Iron Co. 12 App. Div. 441. A receiver's bond filed in the wrong office through inadvertence may be properly iiled nunc pro tunc. Whiteside v. Prcndcrgast, 2 Barb. Ch. 471. As to liability of sureties on bond of clerk of court appointed receiver, see Syme v. Bunting, 91 N. C. 48. Where a temporary receiver is ap- pointed, and subsequently he is made permanent receiver, the court may require further bond, but if the bond is not so required his acts are legal. Jones v. Blun, 145 N. Y. 333. For suits on receiver's bond which turned wholly on a question of plead- ing, see Wilde v. Baker, 14 Allen, 349; Keg. v. Bayly, 1 Dru. & War. 216. A receiver is not liable on his bond until he has failed to obey some or- der of the court. State v. Gibson,, 21 Ark. 140. Where a receiver's surety dies or goes abroad, he cannot be charged with expense of new appointment. Lane v. Townsend, 2 Ir. Ch. Rep. 120. Sometimes the receiver will be ap- pointed on his own recognizance. Carlisle v. Berkley, 2 Ambl. 599; Ridout V. Plymouth, 1 Dick. 68. A surety, having paid, may compel cosureties to contribute. Ross v. Williams, 11 Heisk. 410. Sureties on the bond of a clerk are not liable for funds misappropriated by him as receiver over which the court has no control. State, Rogers, V. Odom, 86 N. C. 432. A receiver under N. Y. Laws 1853, 918, chap. 466, § 24, is required to give security. Mechanics' F. Ins. Go's Case, 5 Abb. Pr. 444. The surety of a receiver is liable for interest on his balances, in the discretion of the court. Re Herrick, 3 Ir. Ch. Rep. 183. A receiver and his sureties are lia- ble to a creditor though he is not named in the bond. Ross v. Will- iams, 11 Heisk. 410. RECEIVER'S POWERS. §§25,26 Page 82, sec. 25. — Source of power of receivers. (a) (1) Application for instructions. Morgell v. Royce, 2 Hogan, 235; People, Atty. Gen., v. Security L. Ins. d Annuity Co. 79 N. Y. 267. To justify the receiver in apply- ing for power it is not necessary that the power to lease should be given in the order of appointment or that it gives liberty to apply for instruc- tions. Weeks v. Weeks, 106 N. Y, 626. Page 84:, — (c) Power of statutoky eeceivers. Statutory receivers of railroads are, to some extent, state agents, and unless acting within the scope of au- thority the state is not liable for their acts. Such receivers have no power to contract debts to be paid otherwise than from earnings. State V. Edgefield d K. R. Co. 6 Lea, 353. Statutory receivers are to some ex- tent public agents, and the state is bound by their acts when within the scope of authority, Ihid. Page 81, — (d) Power being limited is notice to all. Under Sayles's (Tex.) Civ. Stat. art. 1464, a receiver cannot as- sume powers and risks not within the grant or control of the court whose agent he is. International & G. X. R. Co. V. Wentworth, 8 Tex. Civ. App. 5. A receiver appointed in an action to foreclose a mortgage on street- railway property, to take possession of the mortgaged property and to operate the road, has no authority to collect claims due the company not covered by the mortgage. Cali- fornia Title Ins. d T. Co. v. Consoli- dated Piedmont Cable Co. 117 Cal. 237. One who contracts with a receiver does so with the knowledge that for an injury received he can get re- dress only by leave of the court, Vanderhilt v. Central R. Co. 43 N, J, Eq, 669, Page 85, sec. 26, — Power to borrow money. The court has power to authorize receiver to borrow money and make the same a first lien on property in the hands of the receiver. Blythe v. Gibbons, 141 Ind. 332. The borrowing of money by a re- ceiver of the furniture and other per- sonal property in a hotel may be au- thorized by the court in order to prevent the closing of the hotel and the loss of the goodwill of its busi- ness during the pendency of a suit for foreclosure. Cake v. Mohun, 1C4 U. S. 311, 41 L. ed. 448. Where a court appoints a receiver of oil leases, the right to which is in litigation, for the purpose of de- veloping the property for the bene- fit of the successful claimant, and permits advances to be made to him by the parties to aid in the develop- ment, with the understanding that the amount advanced to him shall be returned to the unsuccessful litigant in case the amount is realized from the oil produced, it will order a re- turn of the advances to the unsuc- cesssful party if the funds warrant it. Elk Fork Oil d Gas Co. v. Jen- nings, 90 Fed. Rep. 767. 27 §§ 27—29 RECEIVERSHIPS— SUPPLEMENT. Page 87, sec. 27. — Power to loan money. Receiver must loan receivership's funds as directed by the court, or be- come responsible in case of loss, though no bad faith is shown. Cair V. Morris, 85 Va. 21. The court is prohibited by Ky. Civ. Code, § 308, after the appoint- ment of a receiver to take charge of a fund in controversy, from ordering it to be loaned out against the pro- test of a claimant. Vombs v. Breat- hitt County, 20 Ky. L. Rep. 1247. Page 88, sec. 28. — Power to compromise debts. The authority of a receiver of a mutual insurance company under R. I. Gen. Laws, chap. 177, § 28, to do all acts which might be done by the corporation that may be necessary for the final settlement of its un- finished business and the winding up of the corporation, includes power to contest or compromise a claim which he is not satisfied is just, hisur- ance Commissioners v. Commercial Mut. Ins. Co. 20 R. I. part. 1, p. 7. Page 89, sec. 29. — Counsel for receiver and compensation of. Reasonable allowance for plain- tiffs' attorney, on bill filed for dis- solution of partnership when fund brought into court for benefit of cred- itors by receiver, — see Payne v. Mc- ^^amara, 9 Ohio C. C. 132. Factors who, after receiving a con- signment, are enjoined from dispos- ing of it, at the instance of a receiver of the consignor, are not entitled to charge the counsel fees expended in defending their title to the property, to tlie funds in the receiver's hands as part of the damages caused by the injunction. Fidelity Ins. Trust d S. D. Co. V. Roanoke Iron Co. 91 Fed. Rep. 19. Fees of counsel for a receiver in sustaining his own charges should be disallowed, as success would tend to deplete, and not pi'otect, assets in the hands of the receiver. Soicles v. 'Sational Union Bank, 82 Fed. Rep. 139. Fees of counsel for a receiver should not be allowed for the con- duct of the cause in which the receiv- er was appointed, as counsel fees can be chargeable to him only for secur- ing the assets. Ibid. Counsel employed by one other than the receiver of a corporation to aid in resisting a motion to remove the receiver is not entitled to com- pensation out of the corporate ef- 28 fects, where the receiver had counsel who appeared for him in resistance of the motion. Anderson v. Fidelity fC D. Co. 100 Ga. 739. Services of attorneys for the re- ceiver of an employers' liability in- surance company, rendered in de- fending against claims against em- ployers holding policies tlierein in- demnifjing them against such claims, and giving the company the right to take full charge of the de- fense against them, are rendered for the protection and benefit of all the policy-holders, so that the receiver is entitled to pay for them out of the fund in his hands. Ross v. Ameri- can Employers' Liability Ins. Co. 50 N. J. Eq. 41. Creditors who come in to take the benefit of a litigation begun by one of the creditors of an insolvent cor- poration to reach funds belonging to it will not be permitted to defeat the right of the complainant's solicitors to payment out of the fund distrib- uted to the creditors, for services rendered, even after appointment of a receiver, if it was the duty of such solicitors to protect the fund against unfounded claims, and their efforts were successful in defeating claims, the benefit of which went to the cred- itors. Burdon Central Sugar Ref. Co. v. Murphy, 58 U. S. App. 1G6, 31 RECEIVER'S POWERS. 29 C. C. A. 233, sub nom. Burdon Cen- tral Sugar-Ref. Co. v. Ferris Sugar Mfg. Co. 87 Fed. Rep. 810. Attorneys' fees in sustaining the receiver's appointment is a proper charge for expenses. Kim merle v. Dowagiac Mfg. Co. 105 Mich. 640. An order to a receiver to pay "la- borers and employees for labor and services, etc., includes professional services of counsel. Gurney v. At- lantic d- G. W. R. Co. 58 N. Y. 358. Counsel fees should be an annual allowance. Boston Safe Deposit & T. Co. V. Chamberlain, 25 U. S. App. 251, 60 Fed. Rep. 847, 14 C. C A. 363. An agreement between a receiver whose compensation is fixed by the court, and his attorney, whereby the latter is to get only half of the at- torney's fees stipulated for in the obligations on which he may bring suit for the receiver, inures to the benefit of the debtors, and, if known to them, is available as a defense pro tanto, and, if unknown to them, may be made the basis of a direct proceeding to set aside a judgment including the full amount of such fees. Hammond v. Atlee, 15 Tex. Civ. App. 267. An allowance of only $1,000 to a receiver for services of counsel ex- tending over thirteen months, con- sisting of advice required in the proper performance of his duties, and applications to the court as to the payment of dividends, and serv- ices in adjudications determining the liability of funds in his hands for certificates of profits amounting to about $38,000, — is insufficient. Re New York Mut. Ins. Co. 17 App. Div. 633. A fund in the hands of a receiver of a corporation, representing the proceeds of a judgment obtained by it, is not subject to the lien of an at- torney for services rendered general- ly to the corporation at its request, but not in the action in which the judgment was obtained. Anderson v. E. De Braekeleer & Co. 25 Misc. 343, Confirming Referee's Report in 28 N. Y. Civ. Troc. Rep. 306. A receiver of an insolvent, who is also an attorney at law, will be al- lowed counsel fees only for services requiring special legal skill, as he ia under obligation to perform such duties in respect to the trust as an ordinarily competent business man is presumed to be capable of perform- ing. Olson V. State Bank (Minn.) 75 N. W. 378. An intervention by a debtor in a judgment in favor of a receiver, in an application by the attorney of the receiver to have the attorney's fees fixed and allowed, whereby such debtor seeks to reduce the judgment by one half of the attorney's fees in- cluded therein, which the attorney had agreed to allow the receiver to retain, is a direct proceeding within the rule that a judgment may be as- sailed in a direct proceeding for fraud or accident preventing the party from availing himself of a valid defense, where the court is the same which rendered the judgment, and has jurisdiction of all the par- ties interested and control of the funds. Hammond v. Atlee, 15 Tex. Civ. App. 267. A counsel fee and a proportionate part of the expenses of an account- ing by a receiver of a corporation are properly charged against a fund realized from collateral pledged with the corporation to secure the performance of a contract with it, which was completed on behalf of the corporation by the receiver, where such expenses were rendered neces- sary by the denial of his right to de- duct the expenses of completing the contract from such fund. Re A. E. Chasmar d Co. 22 Misc. 680. An attorney employed by a corpo- ration without leave of court to re- sist claims against the receiver of the corporation who has all the assets of the corporation in his hands, whose services availed nothing, is not entitled to compensation out of the funds in the hands of the re- ceiver. Anderson v. Fidelity d De- posit Co. 100 Ga. 739. No allowance should be made upon the accounting of a receiver for ser- vices of counsel in obtaining the ap- pointment of a former receiver who is superseded. Sotoles v. National Union Bank, 82 Fed. Rep. 139. From what paid. Counsel fees not for services in be- 29 30 RECEIVERSHIPS— SUPPLEMENT. half of a trust, but in opposition, are not payable out of funds in hands of receivers. Com. v. Mechanics Mut. F. Ins. Co. 122 Mass. 421. The attorney of an intervening creditor in sequestration proceedings against an insolvent corporation for wliicii a receiver was appointed pur- suant to Minn. Gen. Stat. 1894, chap. 76, is not entitled to payment for his services out of the corporate as- sets in tiie hands of the receiver, al- though the attorney brought the resi- dent stockholders into court for the purpose of enforcing their statutory liability, where the latter made up a fund to the amount of their unpaid stocK subscriptions, with which they paid or compromised the corporate debts. lie Northern Trust Co. (Minn.) 77 N. W. 219. A Federal court cannot authorize its receiver to pay out of the funds in his hands, as part of the costs in the suit, counsel fees contracted for by a receiver appointed by a state court over the same property. Amer- ican Loan d T. Co. v. South Atlantic & 0. R. Co. 81 Fed. Rep. 62. Hot entitled to priority, when. An attorney employed by a re- ceiver of an insolvent railroad com- pany appointed by a Federal court to defend suits brought in such court against the company for claims for right of way taken by the company is not entitled to priority for the rea- sonable value of his services in such suits, in a general creditors' bill in a state court against the company, where the Federal court did not have jurisdiction because it did not have the custody of the asssets of the com- pany' or the right to sell the same; but such claim may be allowed as a debt against the company on an equality with other claims, where other creditors do not object thereto, although the receiver appointed by the state court does object, where the order appointing him delines his duties, and such objection does not fall within the same. Crosby v. Murristuwn d C. G. li. Co. (Tenn. Ch. App.) 42 S. VV. 507. Attorneys for an insolvent corpo- ration are not entitled to be paid as preferred creditors of the corpora- tion for services performed before the commencement of proceedings for the appointment of a receiver, al- though he continues their employ- ment after his appointment. Re Montgomery (N. J. Eq.) 30 Chicago Leg. News, 237. By whom appointed; corr/pensation. A receiver has no right to employ counsel without the consent of the court. When appointed, the court de- termines their charges. Walsh v. Raymond, 58 Conn. 251. Who employed. A receiver in supplementary pro- ceedings may employ the attorney of the party for whose benefit the proceedings are instituted. Baker V. Van Epps, 00 IIow. Pr. 79. Counsel for either party are not employed as a rule, but it is only when tlie receiver is acting adversely to one or the other that the rule ap- plies, flynes v. McDermott, 14 Daly, 104. Independent counsel for a receiver should be appointed. Emmons v. Davis d D. Pottery Co. (N. J. Eq.) 16 Atl. 157. Case referred to master to ascer- tain whether there was a valid claim for counsel fees. People v. E. Rem- ington d Sons, 45 Hun, 347. Page 91j sec. 30. — Power to sue. Power of a receiver to convert property into money and distribute the same conveys the implied power to manage and preserve. Vander- bilt V, Central R. Co. 43 N. J. Eq. 069. Mo. Rev. Stat. §§ 551, 2193, 2194, 80 confer no authority on a receiver of an insolvent corporation to prosecute actions for damages for the miscon- duct of directors. A court of equity under its general power may do so. Thompson v. Greeley, 107 ^lo. 577. Where the judgment debtor is in. RECEIVER'S POWERS. §§ 31—33 possession of property as agent of a tliird person who owns by paper title apparently good, it is improper to order a delivery to the receiver. The receiver in such case must sue. Rod- man v. Henri/, 17 X. Y. 482. A receiver of anotner's personal property, with power to take, col- lect, recover, and sequester all the rents and profits of his real estate, and to sell and dispose of his person- al estate, has no authority, after bid- ding in the pi-operty at a sale under an execution, to sell it while acting in his fiduciary capacity as receiver. Donahue v. Quackenbush (Minn.) 77 K W. 430. A receiver of a corporation ap- pointed in another state should not be allowed, by an exercise of comity, to sue for the enforcement of the li- ability of stockholders, when it would be in contravention of the rights of the citizens of the state, and operate to their injury. Wy- man v. Eaton, 107 Iowa, 214, 43 L. R. A. 695. A receiver of a building and loan association, empowered, ordered, and directed by the court to collect all claims due to such association, by suit or otherwise, has authority to bring an action to foreclose a mort- gage due to the association. Hat- field v. Cummings, 152 Ind. 280. Poicer to vote stock. Where a receiver has been ap- pointed under a creditors' bill, the court may order the defendant to ex- ecute a proxy or power of attorney to enable the receiver to vote the stock of the corporation, over which he is appointed at the meeting of stockholders. Atkinson v. Foster, 27 111. App. 63. Page 93, sec. 31. — Power to make repairs. A receiver in charge of a railroad will not be prevented from renewing the piling supporting a bridge across a stream, at the suit of county com- missioners, on the ground that the piling interferes with the flow of the water, if there is a county bridge 25 feet above the railroad bridge, un- der which the clear space is only one half as great as under the railroad bridge, while the piling is not shown to interfere with the flow of water. Van 'Wert County v. Peirce, 90 Fed. Rep. 764. The receivers of a railroad com- pany appointed by an order dii'ect- ing them to continue the operation of the company as it had been oper- ated, keep the premises and property in good condition and repair, and at their discretion carry out any and all contracts that the company ha3 made, and renew the same, have au- thority, without further orders of the court, to continue contracts for the rental and repair of cars pre- viously entered into by the company. Mercantile Trust & D. Co. v. South- ern Iron Car Line Co. 113 Ala. 543. An order to change the location of a railroad and build a bridge should be made only on report of the master showing the necessity. Hand v. Sa- vannah & C. R. Co. 10 S. C. N. S. 406. Page 94, sec. 32. — Power to purchase supplies, labor, etc. Where a receiver is appointed to run a hotel and make such purchases as may be necessary, he has implied authority to purchase on a credit, in the absence of any provision in the order of appointment. Highland Ave. & B. R. Co. v. Thornton, 105 Ala. 255; cf. Thornton v. Highland Ave. d B. R. Co. 94 Ala. 353. Page 96, sec. 33. — Power to continue business. A receiver appointed on the ap- plication of a subscriber to secure the location of a factory, for the purpose of protecting the intorosts of tlie subscriber, sliould not bo au- thorized to continue the business 81 §34 RECEIVERSHIPS— SUPPLEMENT. generally, but only to collect debts and protect the property. Vance v. Shiawassee Circuit Judge, 102 Mich. 342. In an action to restrain an insol- vent defendant from miuinrmance. Jie Dc7iison, 114 N. Y. 02 1. Expenses paid by purchaser, when. A court which, in decreeing the sale of a railroad in possession of a receiver, requires the pur- chaser, who is a mortgagee, to pay the expenses of the receivership as part of the purchase price, and gives lienlioklers the right to resort to property not covered by the liens for deficiency, will be held to have in- tended that the claims against the receivership should be extinguished by payment, where to permit the purchaser to hold them as claims against the property would enable it to appropriate the whole of the prop- erty not subject to liens, to the ex- clusion of other lien claimants. Mor- gan's L. & T. R. & H. S. Co. v. Moran, 91 Fed. Rep. 22, 33 C. C. A. 313. Reservation of jurisdiction, upon ordering a railroad in the hands of a receiver to be turned over to the pur- chaser at foreclosure sale, for the purpose of enforcing payment of all the receiver's liabilities, will include power to hear and determine ques- tions touching the receiver's liabil- ity for injuries caused by the receiv- er's mismanagement or negligence. Central Trust Co. v. Colorado M. R. Co. (C. C. D. Colo.) 1 Denver Legal Adv. 496. Purchaser not liable when. The purchaser at a judicial sale is not liable on a contract by the re- ceiver for supplies, and may assume or repudiate the same. Sloss Iron d S. Co. V. South Carolina dc G. R. Co. 42 U. S. App. 748, 85 Fed. Rep. 133, 29 C C. A. 50. Purchase by receiver. A purchase by the receiver at his own sale, as agent of another, is void- able at the election of a party in in- terest. Carr v. Houser, 46 Ga. 477. A sale to a receiver of property over which he is appointed will not be upheld. Eyre v. McDonnell, 15 Jr. Ch. Rep. 534. RECEIVER'S POWERS. §§ 36-38 A receiver cannot, without special leave of the court, become the pur- chaser of lands over which he is re- ceiver. Alven V. Bond, Flan. & K. 196, 3 Ir. Eq. Rep. 365. Page 104, sec. 36. — Power to lease. The court may order receiver to take a lease of another road, or even order him to build another, if neces- sary for the preservation and pro- tection of the property. Gilbert v. Washington City, V. M. tC- G. 8. R. Co. 33 Gratt. 586. Reference to master to determine if receiver should lease. Gibbons v. Hoivell, 3 Madd. 469. The court has power to authorize a receiver in a partition proceeding to lease the property. Weeks v. Weeks, 106 N. Y. 626. Statutory receivers have no power to lease the railroad over which they are appointed; nor can such a lease be ratified. State v. McMinnville & M. R. Co. 6 Lea, 369. The court refused to authorize a receiver to surrender a lease and make a new one for less rent. Duty of receiver to advertise for tenant, etc. Lorillard v. Lorillard, 4 Abb. Pr. 210. The court has no power to declare void a lease made by receiver in good faith, in accordance with the pro- visions of a will, in the interests of the beneficiaries of such will. Bay- ly V. Gaines (Va.) 2 S. E. 739. Page 108, sec. 37. — Power over property in foreign jurisdiction. A receiver of rents in India may be appointed in England. v. Lindsey, 15 Ves. Jr. 91. Courts exercise jurisdiction in re- lation to lands abroad, where the par- ties are within control. Massie v. Watts, 6 Cranch, 148, 3 L. ed. 181; Ward V. Arredondo, Hopk. Ch. 213, 14 Am. Dec. 543 ; Le Roy v. Rogers, 3 Paige, 236; Hawley v. James, 7 Paige, 218, 32 Am. Dec. 623; Sutphen v. Fowler, 9 Paige, 280; Briggs v. French, 1 Sumn. 504; Congden v. Lee, 3 Edw. Ch. 307. In England the court has enter- tained jurisdiction to settle bound- aries in Jamaica. Tulloch v. Hart- ley, 1 Younge & C. Ch. Cas. 114. Page 111, sec. 38. — Power to impeach fraudulent acts of debtor. Fraudulent mortgages. A receiver in supplementary pro- ceedings may avoid an invalid mort- gage in behalf of the creditors he represents. Hedges v. Polhemus, 9 Misc. 680; Mandeville v. Avery, 124 N. Y. 376 iKuser v. Wright, 52 N. J. Eq. 825. A receiver of an insolvent corpo- ration may assail a chattel mortgage executed by the corporation because of the failure to refile it as required by the New York statute. Farmers' Loan & T. Co. v. Baker, 20 Misc. 387. The receiver of the property of a corporation may avoid a prior chat- tel mortgage upon the corporate property, on the ground that it was not filed as required by the law re- lating to such mortgages. Bayne v. Brewer Pottery Co. 90 Fed. Rep. 754. Fraudulent conveyances. The receiver of an insolvent debt- or may avoid a sale by such debtor of his personal property to defraud hi3 creditors by demanding of the fraud- ulent vendee a return of the prop- erty, and may replevy the property, or sue the vendee for its value, upon the refusal of such dc^nand, without first bringing an equitable action to 37 V § 40 ^RECEIVERSHIPS— SUPPLEMENT ipPl set aside the sfile. Rossuian v. Mitchell (Minn.) 75 N. W. 1053, De- nying Rehearing in 7G N. W. 48. Without an action for that pur- pose the i-eceiver is in no position to question the validity of a transfer. Re Castle, 2 N. Y. S. R. 3()2. The receiver of an insolvent com- pany may by suit or defense avoid any instrument which is a fraud on creditors. Graham Button Co. v. Spielmann, 50 N. J. Eq. 120. A receiver appointed in an action by the creditors of a firm in aid of an assignment for creditors by the firm to set aside a prior transfer to a cor- poration cannot properly be treated as a receiver of the corporation, al- though he entertains the belief that he is such a receiver, and has so de- scribed himself in certain papers. Badger v. Sutton, 30 App. Div. 294. Notice under New York statute to parties with property in their posses- sion to turn over is not a prerequi- site to a suit by him to compel an ac- counting for property transferred. Stiefel V. A'ezc York Novelty Co. 25 Misc. 221. A receiver in supplementary pro- ceedings of the property of a foreign corporation has the same right as any other receiver of a corporation, under N. Y. Laws 1858, chap. 314, §§ 1, 2. Stephens v. Meriden Britan- nia Co. 13 App. Div. 2GS. A receiver in a supplemental pro- ceeding has no right to bring suit to set aside a conveyance to hinder, delay, or defraud creditors. Hayner V. Foiclcr, 16 Barb. 300. A receiver may repudiate the ille- gal transfer of securities. Ohio v. Leavitt, 7 N. Y. 328. Before a receiver can disaffirm a fiaudulont conveyance, ho must show a judgment and execution returned, as in such case he does not repre- sent the corporation, but the credit- ors. Buckley v. Harrison, 10 Misc. 083. A receiver is the only one who can attack a fraudulent conveyance. Angcll V. Pickard, 01 Mich. 501. Fraudulent judgments. A receiver of a corporation is not estopped to assail a confession of judgment by the corporation on the ground that it was made while the corporation was insolvent, by an or- der of the court approving the report of a former receiver of the corpora- tion, which falsely represented that all of the debt, except a balance upon the judgment, had been paid, permitting him to turn over the goods in his hands to the corporation subject to the lien of the judgment, and discharging him as receiver. Compton V. Schwahacher Bros. & Co. 15 Wash. 306. A receiver of the goods of a debtor is properly appointed under N. C. Code, § 379, subd. 1, in proceedings to restrain the sale of such property by one to whom the debtor has con- fessed judgment and who has seized the same under execution, where there is evidence that such judg- ment was confessed for the purpose of defrauding creditors, and the debtor has no property in the state subject to execution, and that the sheriff sold the property under such execution after the issuance of the restraining order to the judgment creditors, who still have the property or its proceeds. Stern v. Austern, 120 N. C. 107. Page 117, sec. 40. — Power to issue certificates. Formal notice of an application for the issuance of receivers' certifi- cates which shall be prior to existing liens need not be given to the hold- ers of such liens, provided its equiva- lent is given and they are allowed the opportunity of contesting the appli- cation. Crosby v. Morristovm & C. G. R. Co. (Tenn. Ch. App.) 42 S. W. 507. a8 LKON F. MOs ^ It is not an unbending rule that a receiver is not allowed to appeal from an order to turn over property and funds. Thus, if he is ordered to turn over more than he has in cus- tody, it is essential to the protection of his rights that he be allowed to appeal. Uoio v. Jones, 60 Iowa, 70. An order that a receiver invest funds is appealable. Collins v. Case, 25 Wis. 651. A receiver appointed in a suit to foreclose a mortgage on a railroad may appeal from a judgment against him for damages for personal in- juries. Thorn v. Pittard, 8 U. S. App. 597, 62 Fed. Kep. 232, 10 C. C. A. 352. Where a decree appointing a re- ceiver decides the right to possession of property in contest, and the com- plainant is entitled to have it im- mediately carried into effect, it is final and appealable. Winthrop Iron Co. V. Meeker, 109 U. S. 180, 27 L. ed. 898. An appeal may be taken from an order to a receiver appointed to set- tle partnership affairs, to pay either or both members, upon request, for services in conducting the firm busi- ness, without reference to the state of the accounts between them as shown by the firm books, the pay- ments to be accounted for on final settlement, where the state of the as- sets is such that the payments, if erroneous, cannot be restored. Tay- lor V. Sweet, 40 Mich. 736. An appeal may be taken by re- ceivers for a corporation, either in their own names or that of the cor- poration, from an order continuing an action against them, made in a case pending when the appointment was made. People v. Troy Steel & I. Co. 82 Hun, 303. An appeal by a receiver from an order granted on an intervening pe- tition is proper when it is in the na- ture of an adversary proceeding. Dillingham v. Hawk, 23 U. S. App. 273, GO Fed. Rep. 494, 23 L. R. A. 517. A motion in vacation for the revo- cation of an ex parte appointment of a receiver, which was made in vaca- tion, is permitted by a reasonable construction of Mo. Laws 1895, p. 91, providing for an appeal from an or- der refusing to revoke or change an interlocutory order appointing a re- ceiver. St. Louis, K. <& S. R. Co. v. Wear, 135 Mo. 230, sub nom. State, St. Louis, K. d S. B. Co., v. Wear, 33 L. R. A. 341. An order appointing a receiver is appealable as a final judgment, with- in the meaning of Utah Const art. 8, § 9, as the question whether an or- der is appealable depends on its ef- fect on the rights of the parties, rather than the stage of the litiga- tion. Ogden City v. Bear Lake & River Watenvorks <& Irrig. Co. 16 Utah, 440, 41 L. R. A. 305. A receiver may appeal in his in- dividual capacity from an order which determines that after his dis- charge from office he will be per- sonally liable for obligations which he has contracted officially. Re Premier Cycle Mfg. Co. 70 Conn. 473. The creditors of an insolvent cor- poration, part of the assets of which consist of the stock in another in- solvent corporation, may appeal from the allowance of claims against the latter corporation by the receiver thereof, where such receiver is also receiver of the other corporation. Blake v. Domestic Mfg. Co. (N. J. Eq.) 14 Bkg. L. J. 550, 38 Atl. 241. A corporation can appeal suspen- sively from an order appointing a re- ceiver for it. Metropolitan Bank v. Commercial Soap, C. cC- S. Manufac- tory, 48 La. Ann. 1383. Mandamus will not lie in Michi- gan to review an order for the ap- pointment of a receiver. Scott v. Speed, 58 Mich. 312. An attaching creditor whose right to intervene has been denied in a proceeding to appoint a receiver has no appeal. He may resort to pro- hibition. State, J. M. Arthur Mach. Co., v. Snohomish County Super. Ct. 7 Wash. 77. Objections to the preliminary affidavit in supplementary proceed- ings cannot be raised on an appeal 89 §41 RECEIVERSHIPS— SUPPLEMENT. from the order appointing the re- ceiver, when not made in the trial court. Union Bank v. Sargent, 53 Barb. 422, 35 How. Pr. 87. An order by the supreme court of New York, granted upon tlie appli- cation of a receiver, extending the time for presentation of claims, is discretionary, and therefore not ap- pealable. People, Atty. Gen., v. Se- curity L. Ins. & Annuity Co. 79 N. Y. 21)7. No appeal lies under Miss. Code, § 2311, from an order removing a re- ceiver. Hanon v. Weil, 09 Miss. 470. An appeal will not lie, in the ab- sence of statutory authority, from an order substituting one person for another as receiver. International Bldg. L. c6 Invest. Union v. McGoni- gle, 72 111. App. 399. An appeal from an order substitut- ing one person for another as re- ceiver is not authorized by 111. act 1887, providing that whenever an in- terlocutory order is entered "ap- pointing a receiver," an appeal may be taken therefrom. Ihid. A receiver cannot appeal from an order removing him from office, on the ground that a finding of facts therein states that he mismanaged the property in various particulars, and that his business reputation may be thereby damaged, where he asked to have such finding made, and there was no necessity for it. Re Premier Cycle Mfg. Co. 70 Conn. 473. A receiver cannot, either as such or individually, appeal from an or- der removing him from office, where the court had jurisdiction to make it. Ihid. A receiver cannot appeal from an order removing him from office, on the ground that it contains a finding which may be construed to import that he is personally liable for cer- tain bills contracted by him as re- ceiver, as such finding cannot be used against him on any subsequent accounting, or in any other suit. lUd. A receiver has no right to appeal from an order denying a motion made pending a hearing upon a pe- tition for his removal, authorizing him to sell certain property of the 40 estate at auction, and from the pro- ceeds pay debts wliich he liad con- tracted in tlie management of tiie business. Ihid. An appeal will not lie by a rail- road company from the portion of an order denying a petition for the pay- ment of debts incurred for current expenses before the receivers' ap- pointment, out of the assets in his hands, which declares that the com- pany is indebted to the petitioners, as such provision would not bind the company in any proceedings taken for the collection of the claim. Guarantee Trust & 8. D. Co. v. Philadelphia, R. d N. E. R. Co. 31 App. Div. 511. A receiver cannot appeal from a decree allowing certain just claims preference to a mortgage, on the ground that there had been no diver- sion of income, where neither the trustee nor the bondholders object. Bostcorth V. Terminal R. Asso. 53 U. S. App. 302, 80 Fed. Rep. 969, 26 C. C. A. 279. The objection that the receiver ap- pointed to rent out land until it could be sold in partition proceed- ings was a solicitor in the case and interested in the land as an heir is not available on appeal in the parti- tion proceedings after the receiver has made final settlement, — especial- ly where no specific wrong by him is pointed out. Rogers v. Rogers (Tenn. Ch. App.) 42 S. W. 70. The creditors of an insolvent cor- poration, part of the assets of which consist of the stock in another in- solvent corporation, may appeal from the allowance of claims against the latter corporation by the receiver thereof, where such receiver is also receiver of the other corporation. Blake v. Domestic Mfg. Co. (N. J. Eq.) 14 Bkg. L. J. 550, 38 Atl. 241. Time withi^i which appeal taken. An appeal must be taken within the time allowed by statute. Rus- sell V. First Nat. Bank, 65 Iowa, 242. A delay of eight years in appealing from a receiver's disallowance of a claim is a bar to relief. Leo v. GVeoi, 52 N. J. Eq. 1.- EECEIVER'S POWERS. Page 119, sec. 42. — Miscellaneous powers. § 42 A receiver under the direction and authority of the court has power to continue the payment of bounties. Re Reddington, 1 Molloy, 256. To sell horses as perishable prop- erty. Howell V. Frances (N. J. Eq.) 9 Atl. 379. To proceed and act for all credit- ors. Angell v. Silsbury, 19 How. Pr. 48. To complete an unfinished portion of a railroad. Kennedy v. St. Paul d P. R. Co. 2 Dill. 448. And may apply to court for in- structions. Re Knickerbocker Bank, 19 Barb. G02. The court in possession through its receiver exercises the power of the board of directors of an insolvent in- surance company in addition to the powers conferred by statute. Rand, McN. & Co. V. Mutual F. Ins. Co. 58 111. App. 528. The receiver has no power to trans- fer to a foreign jurisdiction ques- tions concerning the distribution of assets. Reynolds v. Stockton, 43 N". J. Eq. 211. Or to condemn property for rail- road purposes. Minneapolis & St. L. R. Go. V. Minneapolis & W. R. Co. 61 Minn. 502. The receiver of a nonresident as- sociation is not, as matter of right, entitled to appear and defend in at- tachment proceedings against it, •where its nonresident assignee has appeared and moved to have the pe- tition made more definite, and has thereafter made default, although the receiver's answer was filed be- fore the default was entered against the association and its assignee. Eedrick v. McElroy (Iowa) 76 N. W. 710. A sheriflf appointed receiver of the property of a judgment debtor as permittea bj' the Kansas statute has the same authority as any other ap- pointee would have. Teats v. Bank of Herington, 58 Kan. 721. A receiver is entitled, the same as any other party in an action to which he is a party, to a trial by jury on questions of fact, the right to which is guaranteed by the Texas Constitution. Eamm v. /. Stone & Sons Live-stock Co. 13 Tex. Civ. App. 414. A receiver of a national bank can- not recover upon notes made for the accommodation and advantage of the bank with full notice to its manag- ing officer, as he stands in the shoes of the bank. Stapylton v. Teague, 52 U. S. App. 577, 85 Fed. Rep. 407, 29 C. C. A. 229. In an action upon a promissory note, brought by one who purchased it in good faith at a judicial sale made under the authority and with the sanction of the court, an inter- vening receiver w'ho sets up title to the note cannot be permitted to col- laterally impeach such sale, where the parties at whose suit he was ap- pointed had opportunity to seize the assets before the sale or intervene in the actions which led up to it. Anderson v. Chicago Title & T. Co. 101 Wis. 385. The power of a receiver to incur obligations for supplies and ma- terials incidental to the business, with permission of the court, follows as a necessary incident to the re- ceivership. Cake V. Mohun, 164 U. S. 311, 41 L. ed. 447; Ellis v. Veryion Ice, Light & W. Co. 86 Tex. 109. A receiver of a corporation, with only the power specified in N. Y. Code Civ. Proc. § 1788, is a mere cus- todian and manager of the property under direction of the court during the pendency of the action, and can- not discharge an employee under con- tract with the corporation, or au- thorize a deputy to do so. Murray V. Cantor, 18 Misc. 389. A receiver and manager of a com- pany cannot annul its contracts. Re Marriage [1890] 2 Ch. 063, 65 L. J. Ch. N. S. 839, 75 L. T. N. S. 169. A receiver in chancery who wrong- fully enters into a partnership with anotiier cannot set up his want of au- thority to enter into such partner- ship as a ground for maintaining an action at law against his partner for a sum alleged to be due by account, where such partner would otherwise 41 42 RECEIVERSHIPS— SUPPLEMENT. be entitled to a partnership account- ing. IJtoicah Min. Co. v. Christo- pher, 112 Ala. 554. A receiver has no power to waive the equitable rights of contractors. Keilcy v. Dusenhury, 10 Jones & S. 238. Or to allow an offset purchased for that purpose after his appoint- ment. Van Dyke v. McQuade, 85 N. Y. GIG. A receiver in a suit in affirmance of an assignment is not permitted to come in and open up a decree in an- other suit, where the assignment is set aside as fraudulent and void. 'Wheeler v. Wheedon, 9 How. Pr. 293. A receiver cannot reach a surplus income created by a person other than the debtor. Such power is in the creditor only in a direct proceed- ins. Levey v. Bull, 47 Hun, 350; Tolles V. ^^^ood, 99 N. Y. 616; Mann- ing V. Evans, 19 Hun, 500. A receiver may remove a cause from a state court to a Federal court when he is a Federal court receiver. Evans v. Dillingham, 43 Fed. Rep. 177. His power ceases in an appeal in an ejectment suit, when the rights of parties are finally declared, after which he holds for the successful partv. Garniss v. San Francisco Super. Ct. 88 Cal. 413. The acts of a receiver cannot be questioned in a collateral proceed- ing. Bradley v. Marine River Phos- phate Min. d Mfg. Co. 3 Hughes, 26. Receivers of a national banlcing association, as such, have not the privilege in all cases of being sued in the United States courts, and can- not remove such cases against them from state to United States courts. Bird V. Cockrem, 2 Woods, 32. The power of a receiver is meas- ured by the order of appointment. Grant v. Davenport, 18 Iowa, 194. But may be enlarged from time to time. State v. Edgefield d K. R. Co. 6 Lea, 353. And in all cases he is bound by his instructions and orders. Burroughs V. Bunnell, 70 Md. 18. The receiver is a ministerial of- ficer. Lafayette Bank v. Bucking- ham, 12 Ohio St. 419. 42 And as such is not required to ren- der professional services as a lawyer. Olson v. State Bank, 72 Minn. 320. The receiver in the management of receivership duties has discretionary power. Morlcy v. Snow (Mich.) 41 L. R. A. 817, 5 Det. L. N. 200. A trustee in a mortgage executed to a building and loan association for which a receiver has been appointed may sell the land under a power contained in the mortgage, but must pay over all the proceeds of the sale to the receiver, although it exceeds the amount of the mortgage, as the liability of the borrowing member cannot be known until it is ascer- tained to what amount the associa- tion is insolvent. Thompson v. "North Carolina Bldg. & L. Asso. 120 N. C. 420. If a receiver to collect has no au- thority to pay debts, but does so with the knowledge of the parties, and no objection is made at the time, they cannot afterwards object. Kellar V. Williams, 3 Rob. (La.) 321. A receiver may ratify a sale made after insolvency or suspension of business, though the act is void un- der statute. Suydam v. Bank of Kew Brunswick, 3 N. J. Eq. 114. The power conferred upon the di- rectors of an insurance company by a premium note by which the maker promised to pay the company a cer- tain sum of money, "in such pro- portions and at such time or times as the directors of said company may, agreeable to their charter, re- quire,"' passes to a receiver of the company appointed by the court of chancery in proceedings taken pursu- ant to the New Jersey statute, against the company as an insolvent corporation. Meley v. Whitaker, 61 N. J. L. 602, Affirming 38 Atl. 840. The power of the court to appoint a receiver to collect the assets of a mutual benefit association does not change the character of the contract between the association and its mem- bers, so as to make them debtors for assessments, when by the contract they were not so. Lehman v. Clark, 174 111. 279, 43 L. R. A. 648, Revers- ing 71 111. App. 366. A receiver to collect rents has power until he is discharged, al- RECEIVER'S POWERS. § 43 though the suit has abated. 'New- man V. Mills, 1 Hogan, 291. A mortgagee does not exhaust his remedy by a foreclosure and sale, but a receiver may be thereafter ap- pointed to collect the rents and prof- its during the period of redemption and apply them upon an ascertained deficiency, wiien the mortgagor is in- solvent. First Nat. Bank v. Illinois Steel Co. 174 III. 140, Affirming 72 111. App. 640. A receiver appointed under Minn. Gen. Stat. 1894, chap. 76, in an ac- tion for the sequestration of tlie as- sets of an insolvent corporation, has no authority, except in cases where it is otherwise pro\aded by statute, to enforce the individual liability of the stockholders of the corporation for its debts. Minneapolis Baseball Co. V. City Bank, 66 Minn. 441, 38 L. R. A. 415. The right of receivers of insolvent banking corporations appointed un- der Minn. Laws 189.5, chap. 145, § 20, to enforce the stockholders' lia- bility, is primarily exclusive of the right, under Minn. Gen. Stat. 1894, chap. 76, to enforce such liability; but the creditors may for good cause shown be permitted by the court in ■which the insolvency proceedings are pending to enforce such liability when the receivers neglect to do so. Anderson v. Seymour, 70 Minn. 358. A receiver to whom a court of com- petent jurisdiction orders the pay- ment of assessments by stockholders has no authority to consent to a de- cree in another state for the payment of such obligations to the creditor in whose suit he was appointed. Castleman v. Tenipleman, 87 Md. 546, 41 L. R. A. 367. The receiver of a corporation, in the absence of statutory authority, cannot sue to enforce a liability cre- ated by statute against stockholders in favor of creditors, independently of what they owe the corporation on the amount of their stock. Gainey V. Gilson, 149 Ind. 58. The court has power to order a state treasurer to pay over to a re- ceiver money held in his hands as a bank fund. Danhy Bank v. State Treasurer, 39 Vt. 92. The receiver of an insolvent cor- poration has no right to file a motion, in assignment proceedings by it, for the dismissal of such proceedings on the ground that the assignment for creditors was made while the pro- ceedings for the appointment of the receiver were pending. Flint v. Poicell, 10 Colo. App. 66. A receiver cannot assign an inter- est in a patent right. Gordon v. Anthony, 16 Blatchf. 234. And he has no right to a partition of property, but may have dower as- signed. Tayne v. Becker, 87 N. Y. 153. Liquidating commissioners of a defunct corporation cannot as such contest debts of copartnerships from the consolidation of which the cor- poration was formed, and whose as- sets it took possession of, and whose indebtedness it assumed to pay, on the ground that more than the legal rate of interest was included in set- tlement of the account by such firm, although dividends to other credit- ors are reduced. Re Leeds & Co. 49 La. Ann. 501. Page 121. — Receiver's possession. The possession of the receiver un- der the direction of the court is the possession of the party entitled to the rents and profits. Horlock v. Smith, 11 L. J. Ch. N. S. 157, 6 Jur. 478. And after his discharge his posses- sion is that of the party in interest. Ibid. In supplementary proceedings the judge has control, under the Nevr York Code, over the assets in the hands of a receiver. Webber v. Bob- bie, 13 How. Pr. 382. A receiver cannot devest himself of trust powers. Mann v, Fairchild, 2 Keyes, 106. He must not interfere in litigation between parties. Comyn v. Smith, 1 Hogan, 81. The claim of an equity or lien on property held by an officer of a cor- poration to secure a debt to himself does not defeat the jurisdiction of a 43 § 43 RECEIVERSHIPS— SUPPLEAIENT. court which has appointed a receiver for the corporation in a suit to which the oflleer is a party, after hearing on due notice and appearance, to or- der him to turn over such property to the receiver. Tinslcy v. Ander- son, 171 U. S. 101, 43 L. ed. 91. Page 121, sec. 43. — How disturbed. After a receiver has been ap- pointed and has become vested with the title to all assets, the creditor in whose behalf he has been appointed has no right to intervene and seize upon part of the estate. Passavant v. Bowdoin, 60 Hun, 433; American Trust & Sav. Bank v. Frankcnthal, 55 111. App. 400: Parker v. Brown- ing, 8 Paige, 388; Wardle v. Lloyd, 2 Molloy, 388 ; State, Remington Paper Co., v. Ellis, 45 La. Ann. 1418 ; Tinlc V. Rundle, 10 Beav. 318; Ames v. Birkenhead Docks, 20 Beav. 332, 1 Jur. N. S. 529; Klauber v. San Diego Street Car Co. 95 Cal. 353; Dor man v. Dor man, 3 Ir. Eq. Rep. 385. Unless the title of a receiver of a state court is impeached under the bankrupt act, his possession of the assets will not be interfered with by the Federal court in bankruptcy proceedings. Re Price (1899) 92 Fed. Rep. 987 ; Alden v. Boston, H. & E. R. Co. (1871) 5 Nat. Bankr. Reg. 230; Clark v. Bininger (1870) 3 Nat. Bankr. Reg. 518. Funds vested in a receiver four months prior to the bankrupt pro- ceedings will not be interfered with by the bankrupt court. Re Meyer (1899) 1 Nat. Bankr. News, 293. A receiver in possession of mort- gaged premises in foreclosure pro- ceedings prior to the commencement of bankruptcy proceedings cannot be dispossessed by the bankrupt court. Davis v. Alabama & F. R. Co. 1 Woods, 661. After property is taken into the possession of a court, no other court can interfere with the possession. Hammond v. Tarver (Tex. Civ. App.) 31 S. W. 841. A receiver in supplementary pro- ceedings becomes the legal assignee of the property in the order men- tioned, and the debtor cannot inter- fere with it. Turner v. Holden, 94 N. C. 70. 44 Where a receiver is in possession, other persons are not permitted to enter without permission, under a claim not theretofore exercised. Johnes v. Claughton, Jac. 573. A sale of land by the trustee in a deed of trust, under a power con- tained therein, while all the property of the mortgagor is in the hands of a receiver, is void. Scott v. Craw- ford, 16 Tex. Civ. App. 477. The sale of property under execu- tion while in the hands of a receiver is void, though the levy is made be- fore the appointment. Walling v. Miller, 108 N. Y. 173. When a receiver is in possession of property, in a suit involving the right of possession merely, the sale of such property by another court is not an interference with the posses- sion. Uickox v. Holladay, 2'J Fed. Rep. 226. A judgment creditor will not, in general, be allowed to enforce his judgment by sale of property in the hands of a receiver. Mercantile Trust Co. V. Baltimore & 0. R. Co. 79 Fed. Rep. 389. Property in the hands of a re- ceiver cannot be attached. Adams V. Roman (unreported), cited in Adams v. Hackett, 7 Cal. 204. Execution cannot issue on a judg- ment against a receiver. Arnold v. Penn, 11 Tex. Civ. App. 325. But a receiver has no right to the possession of property actually at- tached and in the possession of at- taching creditors. State, Perkins, V. Graham, 9 Wash. 528. A receivers' possession is not to be interfered with by suits or other legal proceedings without leave. De Graffenried v. Brunswick & A. R. Co. 57 Ga. 22. An action may be maintained by the direction of the governor for the sole purpose of determining the ques- tion of title to certain lands in con- troversy between the state and a des- RECEIVER'S POSSESSION. S 43 ignated railway company, although such company and. the lands in con- troversy are in the custody of a re- ceiver appointed by the Federal court, and such court has not given permission to sue. Houston <& T. C. R. Co. V. State (Tex. Civ. App.) 39 S. W. 390. The possession of property by a receiver in a state court is no bar to a bill by a creditor in a Federal court. Rejall Greenwood, 60 Fed. Rep. 784. The court cannot permit an at- tachment to be levied upon personal property capable of manual delivery, of a corporation, after the appoint- ment of a receiver, because of a false denial by certain persons to the sheriff that they had such property of the corporation in their posses- sion, as such denial and the conse- quent failure of the sheriff to take the property into his actual custody do not constitute a substitute for the actual custody, which, under N. Y. Code Civ. Proc. § 649, is essential to a lew on such property. Robinson V. Columbia Spinning Co. 23 App. Div. 499. That a firm made a number of fraudulent transfers of property a short time before the commencement of an action for the dissolution of the partnership and the appointment of a receiver does not necessarily es- tablish that the appointment of a temporary receiver in the action un- der an agreement of the parties was collusive and obtained for the pur- pose of hindering, delaying, and de- frauding creditors, so as to take the assets of the firm out of the control of the court and subject them to levy by creditors. Myers v. Myers, 18 Misc. 063. The arrest of a receiver in attend- ance on court will not be permitted. Bratazon v. Teynham, 2 It. Ch. Rep. 563. The court will by injunction re- strain the enforcement of a judgment against property in possession of a receiver. Gardner v. Caldwell, 16 Mont. 221. How acquired or enforced. A writ of assistance will be issued to put a receiver in posBesaion of leased premises after the lessee's rights have terminated, where it be- comes necessary to enable him to turn the premises over to the person entitled thereto; but the application for such writ must be made by some party to the cause other than the receiver. Stephenson v. Giltenau, 5 Ohio N. P. 419. When the petition for the appoint- ment alleged that the property of a corporation had been transferred to an alleged new company not made a party, the court has no right to grant a writ putting the receiver in posses- sion. St. Louis, K. d S. R. Co. v. Wear, 135 Mo. 230, sub nom. State, St. Louis K. & S. R. Co., v. Wear, 33 L. R. A. 341. A rule may be entered to show cause why real estate should not be surrendered to a receiver, and en- force rights of the receiver against a party accused of interfering with his possession or management, xinless the answer sets up some right or title of which a jury trial is claimed. Sullivan v. Colby, 34 U. S. App. 432, 71 Fed. Rep. 400, 18 C. C. A. 193. The court cannot through a re- ceivership interfere with a United States marshal in possession under admiralty process. Thompson v. Van Vechten, 5 Duer, 618. A court will compel the treasurer of a corporation to turn over the funds of the company, or punish by fine or imprisonment. Edrington v. Pridham, 65 Tex. 612. An assignee who has not obtained possession, but has left the assignor in possession, will be required to de- liver it to a receiver. Eastern Nat. Bank v. Hulshizer, 2 N. Y. S. R. 115. A court of equitj'^ in another state, on a bill filed by a receiver of a benev- olent society, can order the trustees of the local branch of the association to pay over the funds in its hands to the receiver. Failey v. Talbee, 55 Fed. Rep. 892. When the custodian for a pur- chaser of property at a sheriff's sale is not before the court the debtor, who is in possession, will not be di- rected to deliver the property to a re- ceiver. Robeson v. Ford, 3 Edw. Ch. 441. A receiver of a corporation ap- 45 § 43 RECEIVERSHIPS— SUPPLEMENT. pointed after an assignment for creditors by such corporation, in a proceeding for its dissolution com- menced before such assignment, can- not by motion compel the assignee to deliver possession of corporate prop- erty. Re Muehlfcld, Hi App. Div. 401. A receiver cannot be put in posses- sion of property on the application of a party who is not himself en- titled to possession and has no inter- est in the property. Huerstel v. Lorillard, 6 Robt. 260, 7 How. Pr. 251. The court may compel delivery of assets to the receiver, though the party in possession is under indict- ment for stealing the same. Tolle- son V. G-reene, 83 Ga. 499. Property of a debtor who has fraudulently confessed judgment in favor of one who purchased such property at a sale under execution issued thereon still belongs to such debtor, and should be delivered to a receiver appointed in proceedings to restrain the execution sale. Stern V. Austeni, 120 N. C. 107. Heirs to whom the legal title to real estate forming part of a trust and situated in another state has passed will be directed to convey to a receiver appointed of the personal property of the trust within the jurisdiction, where the question as to whether or not the trust has termi- nated has been reserved for final hear- ing, and all parties interested are parties to the suit, and it is neces- sary that such real estate be con- served pending the litigation, wheth- er or not such conveyance will give the receiver authority which will be recognized in such other state, where, owing to the fact that there is no litigation in such other state, the courts of that state have no power in the premises. Hogg v. Hoag, 80 Fed. Rep. 595. Wlien an order is to deliver prop- erty the demand must be made by the receiver personally. McCotnb v. Weaver, 11 Hun, 271. When a receiver demands prop- erty, if the demand is otherwise good, objection cannot be taken at the trial that he did not, when de- mand was made, exhibit evidence of 46 his appointment, if refusal to de- liver was not made on that ground. Livingston v. Stoesscl, 3 Bosw. 19. Mortgagees entitled to possession will be excused from turning it over to a receiver when they are willing to give security for the excess. Weihl V. Atlanta Furniture Mfg. Co, 89 Ga. 297. The general practice of the deliv- ery of property to a receiver under the old chancery practice and under the Code, — discussed. Dickerson v. Van Tine, 1 Sandf. 724. A receiver of an insolvent cor- poration is entitled to the possession of money paid into court under an execution on a judgment against the corporation rendered in favor of a director for the purpose of giving him an illegal preference. Tennant V. Appleby (N. J. Eq.) 41 Atl. 110. A person claiming against a re- ceiver should be examined pro in- ieresse suo. Davis v. Greathed, 1 Jac. & W. 176. One in possession of lumber be- longing to a corporation, claiming a lien thereon under N. C. Code, § 1783, for manufacturing the same, should not be required to turn the same over to a receiver of the cor- poration, before a determination of the question as to his right to a lien. Eunisman v. Linville River Lumbar Co. 122 N. C. 583. Contempt. It is contempt of court to disturb the possession of a receiver. Ken- nedy V. Indianapolis, C. d L. R. Co. 2 Flipp. 704. To punish a person for contempt in interfering with the receiver's pos- session, the proof must be clear and beyond reasonable doubt. United States V. Jose, 63 Fed. Rep. 951. It is a contempt of court to cause a receiver's arrest for violating a town ordinance, though the ordi- nance is void. United States v. Mur- phy, 44 Fed. Rep. 39. When the court is without juris- diction the refusal to obey does not render the person liable for con- tempt. St. Louis, E. d S. R. Co. v. Wear, 135 Mo. 230, sub nom. State, St. Louis, K. d S. R. Co., v. Wear, 33 L. R. A. 341. EECEIVER'S POSSESSION. § 43 A debtor cannot be punished for failure to turn over property to a receiver when neither the order appointing nor any subsequent or- der directs him to turn it over. Watson V. Fitzsimmons, 5 Duer, 629. Where the estate over which a re- ceiver is appointed expires, the re- mainderman may enter without con- tempt. Britton v. M'Donnell, 5 Ir. Eq. Rep. 275. A receiver of a railroad who ousts one immediately after possession of a portion of the railroad's right of way has been restored to him under a writ of possession is not guilty of a contempt of the orders or process of the court, where he was not a party to the action, and not in priv- ity with the defendant. Atioood v. State, 59 Kan. 728. A receiver cannot be punished as for contempt for not obeying an or- der made in another court. Merritt V. Sparling, 88 Hun, 491. A receiver may be punished for contempt. The proceeding is crimi- nal in its nature. Thus the question of contempt does not depend on in- tention. Cartwright's Case, 114 Mass. 230. A judgment debtor who interferes with the possession and control of his business by a receiver after such possession was yielded by him is guilty of contempt. Sainherg v. Weinberg, 25 Misc. 327. A judgment debtor for whom a re- ceiver has been appointed may be ad- judged guilty of contempt in dis- obeying an order to attend a hearing before the circuit court commission- er for examination, although a peti- tion taken by him to stay the receiv- ership proceedings is pending, whei'e no temporary stay preventing the judgment creditor from proceeding has been made. Central Nat. Bank V. Graham (Mich.) 5 Det. L. N. 591, 76 N. W. 1042. One who claims to be the owner of a chattel mortgage upon a lease of premises and the property thereon used in the conduct of a business is guilty of contempt of court, and may properly be ordered to deliver up the property, where in an action to dis- solve the partnership a receiver had been appointed whose representa- tive the chattel mortgagee turned out of possession, locking the door upon him. Levy v. Stanion, 53 N. Y. Supp. 472. The right to institute proceedings to punish a former receiver as for contempt in failing to pay over the amount due on his accounting to his successor passes to a surety on his bond who pays such amount and re- ceives in pursuance of an order of the court an assignment of all the rights and remedies of the successor. People, Latoyer's Surety Co., v. An- thony, 7 App. Div. 132. The proper practice is for the re- ceiver to institute proceedings to set aside transfers, and not by contempt for failure to turn over. Ex parte Hollis, 59 Cal. 405. A receiver of a bank whose ap- pointment was invalid because of the prior appointment of another re- ceiver on the same date in another proceeding is not punishable as for contempt in taking and retaining possession of the assets, where he be- lieved in good faith that his appoint- ment was valid. Worth v. Pied- mont Bank, 121 N. C. 343. The court has jurisdiction to re- quire an officer of a corporation who is a party to the action to turn over property of the corporation to a re- ceiver appointed in the action; and disobedience thereof renders him li- able for contempt, although he has a lien upon the property and the judg- ment is therefore erroneous. Ex parte Tinsley, 37 Tex. Grim. App. 517. Though the court may not punish a contempt in interfering with the possession of property by a receiver, and removing a Ijuilding therefrom, by imprisonment of indefinite dura- tion, it may coerce obedience to its order to restore possession to the re- ceiver and return the house, by im- prisoning the contumacious party until he shall comply. Delozler v. Bird, 123 N. C. 689. To punish for contempt for non- delivery to a receiver, an order to deliver is a necessary prerequisite. Demand alone is not sufficient. Tinkey v. Langdon, 60 How. Pr. 180. 47 51 RECEIVERSHIPS— SUPPLEMENT. Surrender of possession. A court having possession of the property of a corporation operating a street railway will not by the pos- session of its receiver prevent the city from taking such course with respect to a remedy as it may be ad- vised, where if the receivership is re- moved the city may urge reasonable arguments in support of its right to oust the company from occupation of its streets; but will, where the com- pany is a mere tenant at will in the streets, order redelivery by the re- ceiver of possession of the tracks and property in the streets, and let the company take the risk of operating the invalid portions of its road, and the city that of any course it may see fit to pursue. Louisville Trust Co. V. Cincinnati Inclined Plane R. Co. 78 Fed. Rep. 307. Possession may be delivered to mortgagees where it is shown that the property is not worth more than the mortgages. Scott v. Crawford, IG Tex. Civ. App. 477. Page 136, sec. 51. — As to tenants; rents. A receiver may be appointed for rents until the devisee's title vests. Rogers v. Ross, 4 Johns. Ch. 388; Pritchard v. Flecticood, 1 Meriv. 55. A mortgagee of land is entitled as against subsequent mortgagees to the appointment of a receiver of the rents and profits pendente lite, where he shows that his security is preca- rious and liable to prove inadequate. Ross V. Vernam, G App. Div. 246. A person taking possession of mortgaged property, knowing of the mortgage and that the mortgagor cannot pay, may be required to sur- render or pay rent to a receiver ap- pointed to collect the rents and profits for the benefit of the mort- gagee. Mutual L. Ins. Co. v. Spicer, 12 Hun, 117. It is the duty of a receiver to col- lect rents, but not to assume the management of actions. Callaghan V. Reardon, Sausse & S. 682. A receiver is entitled to rents in arrears. Codrington v. Johnstone, 1 Beav. 524. The court cannot, on the appli- cation of a receiver, remit rents or make reductions. Robinson v. Shear- er, Hayes & J. 799. An estate by the curtesy will pass to a receiver and entitle him to rent. Beamish v. Holt, 2 Robt. 307. A receiver cannot enforce rent by attachment from a lessee who has assigned his interest. Cane v. Bloomfield, 1 Hogan, 345. A receiver is entitled to the ar- rears of rent unpaid when the order 48 of reference is made. Hollier V. Hedges, 2 Ir. Ch. Rep. 370. A receiver is not entitled to rents due at the time of the appointment. M'Loughlin v. Longan, 4 Ir. Eq. Rep. 325. A tenant may be required to pay rent to a receiver. Hobson v. Sher- wood, 19 Beav. 575. If a tenant has once paid rent to a receiver, a letter demanding subse- quent rent is all that is necessary. Broicn v. O'Connor, 2 Hogan, 77. N. Y. Code Civ. Proc. § 2468, con- strued with reference to rents of realty not occupied by debtor. Ver- mont Marble Co. v. Wilkes, 62 N. Y. S. R. 121. After filing notice of lis pendens in Wisconsin in a foreclosure pro- ceeding a tenant has no right to pay a year's rent in advance, and on the subsequent appointment of a receiv- er will be required to surrender or pay rent. Oaynor v. Blewett, 82 Wis. 313. A motion for an order requiring the tenants of mortgaged premises to surrender possession to the tem- porary receiver appointed in a fore- closure action under N. Y. Code Civ. Proc. § 714, cannot be resisted on the ground that the owner of the equity of redemption has not been served with summons and complaint, where an order for publication of the sum- mons against her has been made. Citizens' Sav. Bank v. Wilder, 11 App. Div. 63. Order against husband and wife EECEIVER'S POSSESSION". § 51 to pay rents, when. Dugro v. Vande- tcater, 35 App. Div. 471. A contractor who constructs a building under a contract with a re- mainderman appointed by the court under the Kentucky statute as an agent for otlier remainderrccn cannot hold the other remaindermen person- ally liable, or have a mechanic's lien for the amount duo him in excess of that which he has received from the proceeds of a loan which such agent was directed to make for the pur- poses of improvement, though the court may, as a matter of equity, ap- point a receiver to apply the rents for his reimbursement. Rudd v. Lit- tell, 20 Ky. L. Rep. 162. Modifying on Rehearing 20 Ky. L. Rep. 158. A receiver of land directed to be sold may be appointed by the court to collect the rents and hold the same subject to further order of the court, although there has been no appeal from judgment directing the sale, where a stay of execution has been obtained until the decision of a mo- tion for new trial. Ereling v. Kre- ling, 118 Cal. 413. A receiver to collect the rents and profits of mortgaged premises and apply them on the mortgage indebt- edness will be appointed where the mortgagor in possession is insolvent, and has failed to pay the taxes and costs of insurance, and there is a question as to whether the mort- gaged premises will prove adequate security for the amount of the mort- gage debt. Winkler v. Magdeburg, 100 Wis. 421. A receiver is properly appointed to receive the rents of land during the pendency of a foreclosure suit under a contract for its purchase, and should pay over the amount thereof to the complainant in such suit, where the purchaser seeks to avoid the payment or the purchase price, and the contract provides that on the failure of the purchaser to pay any instalment when due the A'endor may re-enter and repossess the premises. Belding v. Meloche, 113 Mich. 223. In an application for an injunc- tion to restrain certain parties from collecting rents from real estate in which bankrupts have any legal in- terest, injunction should be granted and a receiver appointed. Keenan V. Shannon, 9 Nat. Bankr. Reg. 441, Page 140. — Receiver's title. A receiver does not occupy the po- sition of an innocent bona fide holder for value. Briggs v. Merrill, 58 Barb. 389. A receiver acquires title by legal process, and not in the regular course of dealing in commercial paper. Briggs v. Merrill, 58 Barb. 389; Dubois v. Cassidy, 75 N. Y. 298. A receiver's title is no better than the corporation he represents. Cut- ting V. Damerel, 88 N. Y. 410. A transfer by order of court to a receiver is not governed by the Cal- ifornia insolvent act of 1852. Naglee V. Lyman, 14 Cal. 450. A judgment in an action brought to enforce the right of a creditor to have his debt paid out of the defend- ant's property, though in fact in fa- vor of a receiver appointed by an interlocutory judgment, does not vest in the receiver any interest which may be ordered sold by the re- ceiver, but he must collect the judg- ment, if possible. Goldberg v. Sil- berstein, 19 App. Div. 428. The appointment of a receiver of a corporation which has made an equitable assignment of a judgment to be recovered against stockholders will give such receiver no right to such judgment as an asset of the company. Clark v. Sigua Iron Co. 39 U. S. App. 753, 81 Fed. Rep. 310, 26 C. C. A. 423. Property in factor's hands. The receiver of a corporation suc- ceeds to the title of property of the corporation in possession of a factor, subject to tlie lien for advances in favor of the latter with which it was bui'doned before his appointiuent. Cameron v. Crouse, 11 App. Div. 391. 49 §58 RECEIVERSHIPS— SUPPLEMENT. Property previously transferred. A receiver acquires no interest in property previously transferred by the debtor by virtue ot the order ap- pointing him, but merely a right of action to set aside the transfer, if it was in fraud of creditors. Thomas V. Van Meter, 164 111. 304. Insurance policies. The duly appointed and qualified receiver of a debtor is vested with the legal title to insurance policies payable to the debtor or his estate. Reynolds v. JEtna L. Ins. Co. 28 App. Div. 591. Title of foreign receiver. In New York the title of a foreign receiver is upheld on the principle of comity. If the title is by virtue of a voluntary conveyance or transfer it is sustained as against all, includ- ing even domestic creditors ; but if it depends on a foreign statute or judgment it is sustained against all except domestic creditors. Subject to their superior rights the receiver can reduce to possession all the property of the defendant in that state, and can bring replevin for that purpose, or trover to recover dam- ages for conversion. Notes and ac- counts may be collected by the ordi- nary proceedings, the court regard- ing the receiver as representing the original owner and opening their doors to him as they do to a domes- tic receiver. Mabon v. Ongley Elec- tric Co. 156 N. Y. 190; citing Barth V. Backus, 140 N. Y. 230, 23 L. R. A. 47 ; Vanderpoel v. Gorman, 140 N. Y. 563, 24 L. R. A. 548 ; Toronto Gen- eral Trust Co. v. Chicago, B. & Q. R. Co. 123 N. Y. 37 ; Re Waite, 99 N. Y. 433 ; Ockerman v. Cross, 54 N. Y. 29 ; Petersen v. Chemical Bank, 32 N. Y. 21, 88 Am. Dec. 298; Willitts v. Waite, 25 N. Y. 577 ; Hoyt v. Thomp- son, 19 N. Y. 207; Hoyt v. Thomp- son, 5 N. Y. 320; 'New Jersey Pro- tection & Lombard Bank v. Thorp, 6 Cow. 47; Runk v. St. John, 29 Barb. 585; Pugh v. Hurtt, 52 How. Pr. 22; Middlebrook v. Merchant's Bank, 3 Keyes, 135; Smith v. Tif- fany, 16 Hun, 552. And every remedy will be afforded 60 to gather in the assets, unless it would interfere with the policy of the state or impair the rights of its own citizens. A state that does not discriminate between its own citi- zens and those of a foreign state dis- charges all the obligations required by the rule of curtesy. Mabon v. Ongley Electric Co. 150 N. Y. 190. A foreign receiver has no title to property of the debtor in Wisconsin, and cannot maintain an action to set aside a fraudulent conveyance. Fil- kins V. Nunnemacher, 81 Wis. 91. To terminals. Where a railroad obtains a lease of terminal facilities in a city, and then leases its road, including such facilities, after which a receiver is appointed for it, which results in dis- solution of the latter lease, if the receiver procures insurance on the property included in such terminal facilities "on account of whom it may concern; loss payable to re- ceivers," he has such title as enables him to sue on the policy. Liverpool 7. A decree in favor of judgment creditors, setting aside fraudulent confessions of judgments and trans- fers of property by a firm, will not appoint a receiver and direct the ap- plication of the property and its pro- coeds to the payment of the com- plainant's judgments, where a re- ceiver lias been appointed in an ac- tion for the dissolution of the firm; but the property realized from such judgments and transfers will go to such receiver, and be distributed among the creditors pro rata. Met- calf V. Moses, 22 Misc. GG4. Page 572, sec. 341. — Character of claims allowed. Attorney and counsel fees. A reasonable charge of an attor- ney for services which benefit all the creditors will be paid out of the funds in the hands of a receiver for distribution. Wcigand v. Alliance Supply Co. 44 W. Va. 133. A partner of a receiver of an in- solvent corporation may be allowed a sum as compensation for legal serv- ices rendered as counsel to the re- ceiver, where the latter is not to share in such compensation. Re Simpson, 36 App. Div. 562. Intervening creditors who file an independent petition asking the court to direct the sale of certain property of an insolvent corporation, -which still remains undisposed of in the hands of a receiver of such cor- poration who has been duly ap- pointed, are not entitled to an al- lowance of counsel fees out of the general fund or out of the fund real- ized from the sale of such property, as it was already in the hands of the receiver under the original proceed- ings. G. Ober cG Sons Co. v. Macon Constr. Co. 100 Ga. G35 126 Taxes. After a bank has become insolvent and passed into the hands of a re- ceiver, the receiver cannot be com- pelled to pay taxes assessed upon the shares of stock. Stapyllon v. Thag- gard, 91 Fed. Rep. 93, 33 C. C. A. 353. A receiver may be directed to pay an assessment levied upon the prop- erty in his possession, although it is not shown that there are sufficient funds in his hands to pay the tax in question. Wiswall v. Kunz, 173 111. 110. Where the county has acquired no lien for taxes on personal property which has passed into the hands of a receiver pending litigations of liens more than sufficient to absorb the property, the county has no claim. Howard County v. Strother, 71 Iowa,. 083. When propertj' in the hands of a receiver is not taxable. Brooks v. Hartford, 61 Conn. 112. When receiver should pay fran- chise tax. Re George Mathers Son's Co. 52 N. J. Eq. 607. CLAIMS AGAINST RECEIVERSHIP FUNDS. § 341 When receiver is not liable for franchise tax. Ibid. The lien of the state for taxes has priority over the equitable claim of a creditor. Re Columbia Iiis. Co. 3 Abb. App. Dec. 239. The property in the hands of a re- ceiver is bound for taxes. He can appeal to the court if the tax is in- valid. Ex parte Chamberlain, 55 Fed. Rep. 704. A petition in the same suit for an injunction is the proper remedy to prevent a sale for taxes of property in the hands of a receiver. Virginia, T. & C. ateel & I. Go. v. Bristol Land Co. 88 Fed. Rep. 134. Taxes are not superior to an at- tachment lien subject to which prop- erty was placed in the hands of a receiver. Re Atlas Iron Constr. Co. 19 App. Div. 415. The court of primary jurisdiction of a receivership will follow the de- 'cision of the local Federal court in ordering the receiver to pay local taxes, that such taxes are not irregu- lar and constitute a lien upon the property. Fletcher v. Harney Peak Titi-Min. Co. 84 Fed. Rep. 555. Funds in the hands of a receiver are liable to taxation though col- lected in other states. Schmidt v. Faileij, 148 Ind. 150, 37 L. R. A. 442. Moneys in the hands of a receiver will not be directed applied to the payment of taxes for the year in which the property was sold, at the instance of a purchaser, where there was nothing in any of the decrees to show that the failure to provide for the payment of taxes for that year was a clerical error or mistake, and the taxes were not due at the time of the sale, and the purchasers by ex- amining the master's report and de- crees could readilj^ have ascertained that no provision had been made for the paj'ment of such taxes. Fidelity Ins. T. cC .S'. D. Co. v. Roanoke Iron Co. 84 Fed. Rep. 752. Interest. Interest should not be allowed upon a claim given priority over a mortgage in funds in a receiver's hands, where it is not shown that there is a fund specially applicable to its payment that will not be ex- hausted by the allowance of interest^ but interest should be allowed from the time of the decree in favor of the claimant. ISlew England R. Co. v. Carnegie Steel Co. 75 Fed. Rep. 54, 21 C. C. A. 219, 33 U. S. App. 491. A receiver is not liable for inter- est on money withheld by him until he could be advised as to his duty in the premises. Guignon v. First Nat. Bank (Mont.) 55 Pac. 1051. Interest will not be allowed in South Carolina on open accounts against the receiver of a railroad, in the absence of a contract or course of dealing. South Carolina v. Port Royal & A. R. Co. 89 Fed. Rep. 565. As to the payment of interest on encumbrances, see Leicis v. Zouche, 2 Sim. 388, 393. The court will not take the net earnings in the hands of its receiver, when large expenses have accrued in the management, and apply the same to the payment of interest.. Cleveland, C. & S. R. Co. v. Knicker- bocker Trust Co. 64 Fed. Rep. 623. Rule where creditors hold collaterals. The courts in the exercise of the power conferred by Conn. Gen. Stat. § 1942, to make such orders as to the payment of debts and distribution of the effects of an insolvent corpora- tion by the receiver as may be just and conformable to law, will adopt the principle of the provision of Conn. Gen. Stat. § 590, requiring a secured creditor who presents his claim against an insolvent estate to- elect between the surrender of his security and a dividend only upon the excess of such claim above the value of his security. Re Waddell- Entz Co. 67 Conn. 324. That claims of creditors are se- cured by mortgage on property other than that of the insolvent does not debar the holders from sharing in the distribution of funds by the re- ceiver of the insolvent. Taylor v. Moore, 04 Ark. 23. The holder of the bonds of an in- solvent corporation as collateral se- curity for an indebtedness is not en- titled to a dividend out of tlie assets of the corporation derived from the proj)erty covered by the mortgage securing the bonds, on tlie basis of 127 § 341 RECEIVERSHIPS— SUPPLEMENT. the aggregate of the property debt and the amount remaining unpaid on the bonds after the mortgage se- curity has been exhausted. Patt- herg v. Leuis Patthcrg & Bros. 55 N. J. Eq. G04. Distinguishing Diin- comb V. Xew York, H. c6 A^. It. Co. 84 N. Y. 190. Expenses. The following expenses are prop- erly allowed a receiver: — Attorney's fees for defense of the estate. Piatt v. Archer, 13 Blatchf. 351 ; Kadish v. Chicago Co-Opcra- tive Breicing Asso. 35 111. App. 411. All reasonable expenses in a suit ordered by the court. Fitzgerald v. Fitzgerald, 5 Ir. Eq. Rep. 525; Jiob- inson v. Bank of Darien, 18 Ga. G5. The ordinary outlays made in good faith by a receiver of a railroad, in the ordinary course of business, for the purpose of promoting the busi- ness of the road and to make it profitable, are within the discretion allowed him. Cowdrey v. Galves- ton, H. d- H. R. Co. 1 Woods, 331. Expenses and counsel fees in re- sisting a motion for removal of a re- ceiver, when he has acted in good faith and integrity, may be allowed. Ibid. If the outlay is large the receiver should apply to the court for di- rection. Ibid. Expenses of a receiver in complet- ing a contract which he was not bound to complete are payable from the sale of collateral, where the work was done by the consent of all parties. Re A. E. Chasmar tt- Co. 22 Misc. 080. A receiver appointed without re- muneration is entitled to premiums paid to his surety, and for manual labor beneficial to the estate, though not part of his duty as receiver. Harris v. Sleep [1897] 2 Ch. 80. GG L. J. Ch. N. S. 59G, 7G L. T. N. S. 670, Reversing GG L. J. Ch. N. S. 511, 76 L. T. N. S. 458. Xet earnings are applied primari- ly to the payment of wages, supplies, and materials furnished. Calhoun v. St. Louis & S. E. R. Co. 9 Biss. 330. Holders of bonds secured by mort- gage on a railroad, who are parties to a proceeding to foreclose liens on 138 the property, and become purchasers at a sale under a decree requiring them to pay expenses of a receiver- ship, cannot claim to be subrogated to the rights of the holders of claims so paid, so as to be entitled to en- force them against property of the railroad not covered by their mort- gage, to the exclusion of holders of other liens on the road, wliere the decree plainly intended that the claims should be extinguished when paid. Morgan's L. cG T. R. d S. S. Co. V. Moran, 91 Fed. Rep. 22, 33 C. C. A. 313. Expenses of a receiver of a railroad in traveling to and from his resi- dence to the railroad property and elsewhere about the country, in the interest of the property in his cus- tody, may be reimbursed to him out of the proceeds of the sale. North- ern Alahama R. Co. v. Hopkins, 59 U. S. App. 74, 87 Fed. Rep. 505, 31 C. C. A. 94. Current expenses are chargeable to the corpus where the income has been diverted. Virginia d A. Coal Co. V. Central R. d Bkg. Co. 30 U. S. App. 2G3; Clark v. Central R. & Bkg. Co. GG Fed. Rep. 803, 14 C. C. A.\\2; Central Trust Co. v. Thur- man, 94 Ga. 735. And this irrespective of who may be the ultimate owner. Illinois Trust d Sav. Bank v. Pacific R. Co. 115 Cal. 285. Where receivership benefits all, the expenses should be borne by all. Johnson v. Garrett, 23 Minn. 5G5. Receivership funds and property are liable for supplies and equip- ments when not unreasonable, as against a purchaser. South Carolina V. Port Royal d A. R. Co. 89 Fed. Rep. 5G5. And for terminal facilities af- forded the receiver. Ibid. And for operating expenses for a reasonable time prior to the appoint- ment of the receiver. Central Trust Co. V. Utah C. R. Co. IG Utah, 12, Citing Farmers' Loan d T. Co. v. Kansas City, W. d N. W. R. Co. 53 Fed. Rep. 182 ; Burnham v. Boioen, 111 U. S. 77G, 28 L. ed. 590; Wood V. 'S'ew York d N. E. R. Co. 70 Fed. Rep. 741 ; Thomas v. Peoria d R. I. R. Co. 3G Fed. Rep. 808. CLAIMS AGAINST RECEIVERSHIP FUNDS. § 341 A receiver of a corporation is en- titled to a lien prior to that of credit- ors under levies prior to his appoint- ment, for interest and taxes paid by him on the loan levied upon to pro- tect it from sale under a mortgage prior to the levies. Durnmer v. Sniedley, 110 Mich. 466, 38 L. R. A, 490. Claims for cars of other railroads, destroyed by a railroad company in the operation of its road within the time specified^ are within an order directing a receiver to pay all such loss and damage claims arising from the operation of the property as in his judgment are proper to be paid as expenses of operation. Crrand Trunk R. Co. v. Central Ver- mont R. Co. 88 Fed. Rep. 636. Mortgagees cannot object to the payment by the receivers of a rail- road of claims for supplies furnished to the road before they took posses- sion, if excess of net earnings re- ceived by them from the time they took possession to the time of the breach of the conditions, over operat- ing expenses and fixed charges, was more than enough to pay these claims. Grand Trunk R. Co. v. Cen- tral Vermont R. Co. 88 Fed. Rep. 620. Claims against an insolvent rail- road company for its right of way taken without paying therefor have priority over certificates of a re- ceiver of such company for expenses of its operation under Tenn. Const. art. 1, § 21,' providing that no prop- erty shall be taken or applied to pub- lic use without the consent of the owner or without just compensation being made therefor. Crosby v. Morristoun & C. G. R. Co. (Tenn. Ch. App.) 42 S. W. 507. [AflF'd by Sup. Ct.] Where the receiver is authorized to incur the expenses of operation, the payment of detectives to prevent loss is proper. Grand Trunk R. Co. V. Central Vermont R. Co. 88 Fed. Rep. 636. And so are expenses of a trip to Europe at the instance ot bondhold- ers to efl'ect a reorganization, \orth- em Alabama R. Co. v. Hopkins, 59 U. S. App. 74, 87 Fed. Rep. 505, 31 C. C. A. 94. And clerical services in making out books for the receiver, where it is necessary to an adjustment of the accounts. Alattheics v. Adams, 84 Md. 143. And fees of a referee for taking testimony and examining the receiv- er's accounts. Re Merry, 11 App. Div. 597. N. Y. Code Civ. Proc. §§ 3236, 3251, subd. 4, provides for the al- lowance on such a reference of a sum for reference fees and printing disbursements, in the discretion of the court. Anders07i v. Brackeleer 25 Misc. 343, Confirming Referee's Report in 28 N. Y. Civ. Proc. Rep. 306. Referees' fees, counsel fees and ex- penses, including attorneys' fees of the receiver of an insolvent corpora- tion, are properly allowed out of the proceeds of a sale of the property of the corporation. Re P. X. Mullet & Co. 47 N. Y. Supp. 277. While there is no liability it may be policy to pay an employee a salary during his recovery from a personal injury. Missouri P. R. Co. v. Texas d P. R. Co. 33 Fed. Rep. 701. The following expenses of the re- ceiver have been held not allowable: Attorneys' fees for hunting up and taking possession of receivership property. Saulsbury v. Lady Ens- ley Coal, I. d R. Co. 110 Ala. 585. Attorneys' fees in defending an ap- peal from an order appointing a re- ceiver; for preparing receiver's bond ; costs growing out of his resig- nation. Ibid. A receiver proceeding in the wrong form of action cannot recover costs in case of a lunatic's estate. Re Montgomery, 1 ^lolloy, 419. Expenses for prosecution of suit in a foreign country not allowed ex- cept on the sanction of court. Mal- colm V. O'Callaghan, 3 Myl. & C. 52. The receiver, being an oiriccr of court, is not entitled to costs (though served with a petition) for his ap- pearance. Herman v. Dunbar, 23 lieav. 312. A person illegally procuring him- self to be appointed is chargeable with costs. Robinson v. M'ood, 39 N. Y. S. R. 466. The court will not decree the pay- 129 § 341 ment of receivers' expenses against the party securing the appointment, though he fail in his suit, where the appointment was proper and the se- cured creditors consented. It may be done if the appointment was wrongful. French v. Gifford, 31 Iowa, 428 ; Jaffray v. Raab, 72 Iowa, 335. The salary paid the president of a corporation while its property is in the hands of a receiver is no part of the expenses of the receivership. 'New liirmingham Iron tC Land Co. V. Blcvins (Tex. Civ. App.) 40 S. W. 829. A claim for a retainer of counsel in a matter not connected with the operation of the road, and for assess- ment of a railroad association, are not within an order directing re- ceivers of a railroad to pay expenses of the operation. Grand Trunk R. Co. v. Central Vermont R. Co. 88 Fed. Rep. G3G. An employee of a receiver has no right to file a petition for an order to compel the receiver to pay him. Gatzmcr v. Philadelphia & A. C. R. Co. 39 N. J. Eq. 3G3. A receiver of a state court is not chargeable with the expenses of a re- ceiver of the Federal court while the property was in his hands. Central Trust Co. v. Thurtnan, 94 Ga. 735. An attorney employed by a receiv- er at a stipulated salary, who seeks in another court to enforce a claim against the receivership property, must show that his claim for services was authorized bj' the court or ap- proved by it. International d G. N. R. Co. v.'Herndon, 11 Tex. Civ. App. 465. A receiver cannot pay out of as- sets in his hands the taxes upon a tug which was not the property of his principal, the tax lien upon which has been enforced in the ad- miralty. McRae v. Bowers Dredg- ing Co. 90 Fed. Rep. 360. As to what were costs and ex- penses of receivership, see Seligman V. Saussy, 60 Ga. 20. 25. Parties are not relieved from lia- bility for receivership expenses by a purchase of the receivership prop- erty under a foreclosure, where the receivership funds have been di- 130 RECEIVERSHIPS— SUPPLEMENT. verted. Knickerbocker v. McKind- leij Coal & Min. Co. 172 111. 535, Allirming 67 111. App. 291. In thia case there was a stipulated decree. So much of the funds in the hands of a permanent receiver appointed in a proceeding under the Georgia traders' act against an insolvent debtor, from the sale of property covered by a mortgage executed and recorded prior to the filing of the pe- tition, as is necessary to pay olf the amount due on the mortgage, is not subject to be diminished by costs and expenses of the receivership ; but so much of such costs and expenses which cannot be met by the general fund arising from the sale of the debtor's property in excess of the amount of the mortgage, or not covered by the mortgage lien, shall be taxed against the petitioners. Bradford v. Cooledge, 103 Ga. 753. The parties to the suit may be re- quired to pay the receivership costs and expenses. St. Louis v. St. Louis Gaslight Co. 11 Mo. App. 237. As, where the plaintiff, on whose motion the receiver was appointed, had no interest in the receivership property. Cutter v. Pollock, 7 N. D. 631. Or where the appointment is pro- cured under the assertion of an un- just and Avrongful claim. Eighley v. Deane, 168 111. 266. Or where a large sum was pro- cured, by reason of the appointment, for the plaintiff's benefit. Farm- ers' Nat. Bank v. Backus (Minn.) 77 N. W. 142. Or where the bill is filed to fore- close a fraudulent mortgage. High- ley V. Deane, 64 111. App. 389. A stipulation that half the receiv- ership expenses shall be paid by one party and half by the other is a recognition of the regularit_y of the receiver's appointment and of his right to compensation. Kimmerlev. Dowagiac Mfg. Co. 105 Mich. 640. A creditor prosecuting a case through the receiver against third parties is liable for costs if he fails, if the suit is for his sole benefit. ^Vard V. Roy, 69 N. Y. 96. When a receiver is appointed without probable cause, the party procuring the appointment should CLAIMS AGAINST RECEIVERSHIP FUNDS. i; 342 pay the expenses. Myres v. Frank- enthal, 55 111. App. 390. The unsuccessful result of the suit does not justify taxing the re- ceivership expenses to plaintiff. Elk Fork Oil & Gas Co. v. Jennings, 90 Fed. Rep. 767; Walton v. Will- iams, 5 Okla. 642. When receiver's agreement con- cerning expenses is void. Shade- wald V. White (Minn.) 77 X. W. 42. Page 574, sec. 342. — Preferred claims. Priority may be determined in the suit in which the receiver is ap- pointed. Myrick v. Selden, 36 Barb. 15. The right of a corporation, al- though insolvent, to prefer creditors, cannot be exercised by its receiver, since such power terminates when the corporate property is placed in custodia legis. Re Osceola Milling Co. 76 Mo. App. 23. That the personnel of a receiver- ship has been changed will not affect the priority of a claim against the receivership. State v. Port Royal & A. R. Co. 84 Fed. Rep. 67. A general creditor has the right to intervene in case of a receivership and contest the validity, as well as the priority, of other claims or as- serted liens. Franklin Nat. Bank v. Whitehead, 149 Ind. 560, 39 L. R. A. 725. An order of court directing a re- ceiver of a corporation to pay a specified dividend on all claims against the corporation does not make the dividend to which a credit- or is entitled thereunder a preferred lien upon the entire assets of the cor- poration; and the remedy of a credit- or whose dividend has not been paid to him is an application to the court. Rockwell V. Portland Sav. Bank, 31 Or. 431. The date when claims must have accrued in order to be entitled to priority of payment under Mass. Stat. 1890, chap. 421, § 14, provid- ing that when an assessment insur- ance company shall discontinue busi- ness a receiver may be appointed to administer any unexhausted portion of the emergency fund, which shall be used first in the payment of ac- crued claims upon certificates or policies, is the date of tlio filing of the bill. Atty. Gen. v. MaHsachu- setta Ben. L. Aaao. 171 Mass. 193. Notes given in the prosecution of the business of a corporation during the pendency of a bill for the ap- pointment of a receiver, and before the appointment, should be allowed whenever they mature, with an ad- dition or rebate of interest, as in in- solvency proceedings, where the cir- cumstances are such as to render it equitable that the rights of the re- spective parties should be adjusted as of the date of the appointment, and not of the filing of the bill. Jones V. Arena Publishing Co. 171 Mass. 22. There is no fixed arbitrary rule barring preferential claims that have been contracted more than six months before the appointment of a receiver. New York Guaranty & Indemnity Co. v. Broderick & B. Rope Co. 48 U. S. App. 668, snh nom. Ntw York Guaranty d Indemnity Co. V. Tacoma R. & Motor Co. 83 Fed. Rep. 365, 27 C. C. A. 550. Priority as between receivers of a bank appointed by different judges in proceedings instituted by a credit- or of the bank and the state treas- urer respectively is to be determined by reference to the date of the ap- pointment, and not by the dates of the commencement of the respective proceedings. Worth v. Piedmont Bank, 121 N. C. 343. In supplementiiry proceedings in North Carolina, priority as between creditors is determined from the date of the application for appointment. Parks V. Sprinkle, 64 N. C. 637. Delay of a creditor entitled to priority in tlie funds in the hands of receivers of a railroad over the mort- gages, until after payment of many other claims of the same class, will not bar recovery if there are assets from whicli the claim can still be paid. New England R. Co. v. Car- 131 § 342 RECEIVERSHIPS— SUPPLEMENT. negie Steel Co. 33 U. S. App. 491, 21 C. C. A. 219, 75 Fed. Rep. 54. A creditor of an insolvent cor- poration in a proper case may be per- mitted to file his claim after the ex- piration of the period limited for that purpose by a rule of the court, and may be allowed a preferential dividend out of the estates coming into the hands of the receiver to such an extent as will put him on an equality with other creditors who have received partial dividends. Pattherg v. Letois Pattherg & Bros. 55 N. J. Eq. G04. A creditor securing the appoint- ment in supplementary proceedings, and who through the receiver ob- tains a decree setting aside a trans- fer of the debtors under 1 N. Y. Rev. Stat. p. 76G, § 20, is entitled to prioritv. Sticfcl v. Berlin^ 28 App. Div. 103. Billholders of a bank are not en- titled to priority over other credit- ors. Cochituate Bank v. Colt, 1 Gray, 382. Creditors of a receiver of a part- nership on account of goods pur- chased from them under order of the court and sanction of the creditors of the partnership, to enable him to dispo.~e of the partnersip assets, are entitled to a preference in the fund in the hands of the receiver over other creditors of the receiver on ac- count of similar sales, who are also creditors of the firm and who have received and retained dividends upon their claims against the firm out of money which should have been ap- plied to the payment of the receiver's creditors. Diamond Match Co. v. Taylor, 83 Md. 394. A receiver of a corporation is en- titled to a lien prior to that of creditors under levies prior to his ap- pointment, for interest and taxes paid by him on the land leaned upon to protect it from sale under a mort- gage prior to the levies. Dummer V. Smedlexj, 110 Mich. 4G6, 38 L. R. A. 490. A nonresident cannot by filing an attachment in Pennsylvania obtain preference over a receiver previous- ly appointed of the property of a citizen of a third state. Paladini 133 v. Maryland Silk Co. IS Pa. Co. Ct. 175. The proceeds of property realized by a receiver in wliose hands it was placed subject to attachment liens are properly paid to the attachment creditors without regard to other creditors, where they are less than the amount of the attachment liens. Re Atlas Iron Constr. Co. 19 App. Div. 415. The lien of an execution or attach- ment secured prior to the appoint- ment will be entitled to a priority. Pease v. Smith, G3 111. App. 411. An attachment creditor of a cor- poration is entitled to payment of the amount of his lien out of funds in the hands of a receiver of the cor- poration to whom the attached property was delivered by the sheriff under an order of court reserving the attachment lien, in preference to a claim for personal taxes assessed against the corporation before the attachment, but not made a lien on the property in question by the issu- ance of a warrant for their collection at that time. Wise v. L. & C. Wise Co. 12 App. Div. 319. A seizure designed to give priority in favor of one over other creditors, based on imminence of insolvency, does not secure such priority. Grand Trunk R. Co. v. Central V. R. Co. 88 Fed. Rep. G22. Receivers of a railroad company which has leased another road, sub- ject to a provision that all the gross earnings of the latter shall be ap- plied first to the expense of mainte- nance and improvement and then to the payment of the interest on the bonds issued by the lessor road, will be directed to make payment of the net earnings to the bondholders in preference to claims for damages arising from the operation of the leased road, where the lease provides that the lessee shall assume all obli- gations of the lessor thereafter in- curred as common carrier, ware- houseman, or otherwise, and save the lessor harmless from all loss by reason of any claim for any neglect, accident, or default happening upon or in connection with the road, and from any claims arising from the maintenance and operation of the CLAIMS AGAINST RECEIVERSHIP FUNDS. § 342 road. Grand Trunk R. Co. v. Cen- tral Vermont R. Co. 81 Fed. Rep. 60. Creditors whose claims are pro- vided by a lease of a railroad to be paid before the payment of net earn- ings to bondholders are not entitled to priority of lien upon the assets in the hands of a receiver of a lessee road which has assumed payment of such claims, where they have let pay- ment to the bondholders be made first, and themselves remain cred- itors of the lessee company. Grand Trunk R. Co. v. Central Vermont R. Co. 78 Fed. Rep. 690. A consignor to a commission com- pany of cattle whose proceeds were to be applied to payment of a note given by him to the company is not entitled to a preference in the assets in the hands of a receiver of the com- pany because the company applied the proceeds of such cattle to the dis- charge of its other indebtedness, further than such proceeds came into the hands of the receiver or went into property which has come into his hands. Metropolitan Nat. Bank V. Campbell Commission Co. 77 Fed. Rep. 705. Rent for a limited period, in South Carolina, has priority. Malcomson V. Wappoo Mills, 85 Fed. Rep. 907. A creditor of a railroad corpora- tion whose claim originated in the negligent act of its servant is not en- titled to be paid in preference to the holders of existing liens upon the corporate property. Farmers' Loan d T. Co. v. Irvine, 48 U. S. App. 324, sub nom. Farmers' Loan & T. Co. v. Northern P. R. Co. 79 Fed. Rep. 227, 24 C. C. A. 511. A claim for services rendered by attorneys under an order of court, in attempting to enforce the collection of a judgment in favor of the master commissioner, which when collected was intended for the benefit of all the creditors of an insolvent corpo- ration in the hands of a receiver, is entitled to priority over the demands of general creditors in the funds of the corporation in the hands of the special master for distribution. Armstrong v. Wagner, 20 Ky, L. Eep. 142. Trust funds. The fund in the hands of the re- ceiver of a national bank will not be held to have been augmented by a trustee's deposit, so as to entitle the trustee to a return of the fund in preference to other creditors of the bank, if the deposit was a check on the bank itself by one of its oificers, and the credit was merely transferred from one account to the other, with- out any actual deposit of money. Beard v. Independent Dist. 60 U. S. App. 372, 88 Fed. Rep. 375, 31 C. C. A. 502. A cestui que trust who joins in a release to the trustee in order to pro- cure a loan of the trust fund to a corporation in furtherance of his own individual interest cannot claim a preference over other creditors out of the assets of the corporation in the hands of a receiver, as the fund lost its quality as a trust fund through his acts. Todd v. Meding, 56 N. J. Eq. 83. It is not essential to the creation of a preference in the funds in the hands of a receiver of a bank for trust funds held by the bank that the trust fund shall be actually traced into specific property coming into the hands of the receiver, but it is sufficient if it can be traced into the general assets of the bank. Leonard V. Latimer, 67 Mo. App. 138. Receivers' certificates. Receivers' certificates are not en- titled to priority as against other lien holders not consenting. Doe v. Northicestern Coal d Transp. Co. 78 Fed. Rep. 62. Persons taking receivers' certifi- cates issued under order of court not making them a prior lien to all other claims, in place of prior certificates which are ordered to be made such prior lien, are not entitled to the preference given under the first or- der. Lewis V. Linden Steel Co. 27 Pittsb. L. J. N. S. 395. Of mortgagees. Claims not in existence when a mortgage was executed, and which are nut given priority by contract or by law, have no oriority over the 188 § 343 RECEIVERSHIPS— SUPPLEMENT. mortgage. Farmers' & M. Nat. Bank V. Waco Electric R. d Light Co. (Tex. Civ. App.) 36 S. W. 131. The law in reference to preferences over the mortgage debts in property of railroads in the hands of receivers is applicable to a water company or- ganized for irrigation purposes, as such purposes are a public use and it is essential to the interests of the public that the company be kept a going concern. Atlantic Trust Co. v. M'oodbridge Canal d Irrig. Co. 79 Fed. Rep. 39. A receiver of an irrigation com- pany cannot be directed to convey water rights to the holder of scrip expressly stipulating that it is ac- cepted only as a payment for the purchase of a permanent water right, and not as a claim against the com- pany for any other purpose whatever, and tlie water rights sought to be recognized as against the mortgage lien are not appurtenant or attached to any specific land. Atlantic Trust Co. v. Woodbridge Canal & Irrig. Co. 79 Fed. Rep. 501. Holders of scrip issued by a water company and receivable in paJ^nent of any water rights are not entitled to priority over a mortgage in the proceeds of the property of the com- pany in the hands of a receiver, what- ever might haA'e been the rights of the person who furnished the ma- terial and supplies for which such scrip was issued. Ihid. All earnings and rents collected by a receiver appointed in an action in the nature of a creditors' bill are sub- ject to the lien of a valid mortgage executed before the rendition of the judgment in favor of plaintiff, and must be paid over to the mortgagee after deducting the expenses of the receivership, where such mortgagee intervenes in the action, provided such payment is necessary to satisfy a deficiency after the sale of the mortgaged property. McKenzie v. Bismar^ck VTater Co. G N. D. 3G1. A mortgagee has an equitable claim on the rents due and to accrue superior to any arising subsequent to the mortgage, by reason of a re- ceivership; and the tenants will be compelled to attorn. Woodyatt v. Connell, 38 111. App. 475. 134 The provision of the acts relating to the Chesapeake & Ohio Canal Company and the Baltimore & Ohio Railroad Company, by which the state of Maryland subscribed to the stock, that the company shall be bound to pay out of the profits a dividend of G per cent per annum, and that the state shall be entitled to have and receive such perpetual divi- dend out of the profits of the work as declared from time to time, does not make any pledge or specific ap- propriation of the profits which will entitle the holders of such preferred stock to priority in the net profits over the liens of subsequent mort- gage bondholders, or the rights of lessors of properties held under leases, or of holders of equipment contracts giving a right of possession upon default. Mercantile Trust Co. v. Baltimore d 0. R. Co. 82 Fed. Rep. 3G0. Complainants in a suit to fore- close a mortgage made by a corpo- ration, of all whose property a re- ceiver is appointed in the suit, are upon a par with other general cred- itors who may become parties to the proceeding, as to any unsatisfied bal- ance that may remain due them, aft- er appropriation to their demand of the proceeds of the property upon which the mortgage is foreclosed, in the assets not subject to the mort- gage or the judgment liens. Mer- cantile Trust Co. V. Southern States Land d T. Co. 52 U. S. App. 675, 83 Fed. Rep. 711, 30 C. C. A. 349. A preferential claim cannot be al- lowed against the property of a les- sor railroad company for the value of rails sold to and on the credit of a stockholder for the benefit of the lessee, over mortgage bondholders of the lessor. Ruhlender v. Chesa- peake, 0. d S. W. R. Co. 91 Fed. Rep. 5, 33 C. C. A. 299. Where a junior mortgagee obtains the appointment of a receiver, ana is authorized to take possession and operate a railroad and receive its earnings, a senior mortgagee may apply for and obtain such earnings. Seibert v. Minneapolis d St. L. R. Co. 52 Minn. 246. Arrears of salary of the president of a railroad company will not be CLAIMS AGANST RECEIVERSHIP FUNDS. 342 paid, in preference to the lien of a mortgage, from income. Xational Bank v. Carolina, K. & W. R. Co. 63 Fed. Rep. 25. The lien of a valid mortgage on railroad property existing at the time of filing a bill, under Ga. Civ. Code, §§ 2719 et seq., for the ap- pointment of a receiver of the rail- road property, cannot be displaced so as to give a preference to a cred- itor who relies solely on a preferen- tial equity. Alexander v. Mercantile Trust d- D. Co. 100 Ga. 537. A mortgage upon city lots after- wards becoming part of street-rail- way property cannot be subordinated to the expenses of a receiver of the property of the company. Third Street & 8. R. Co. v. Lewis, 48 U. S. App. 273. 79 Fed. Rep. 196, 24 C. C. A. 482. Preference to railroad mortgagees is not gained by payment of a judg- ment against the railroad company for damages, when it is paid after its affirmance on appeal by the surety on a supersedeas bond who signed it when the mortgage was in existence and no default had been made upon it and when the railroad company was apparently solvent, al- though the bond may have benefited the mortgagees by preventing a levy on the railroad which might have worked detriment to them directly and indirectly as substantial owners of the property. Whiteley v. Cen- tral Trust Co. 43 U. S. App. 643, 76 Fed. Rep. 74, 22 C. C. A. 67, 34 L. R. A. 303. As to when a mortgagee is entitled to priority in rents over an assignee of the lease from the mortgagor, see Citizens' Sav. & L. Co. v. French, 4 Ohio N. P. 61. Of judgment creditors. Judgments obtained against an in- solvent corporation after the ap- pointment of a receiver of its assets are not liens upon the real estate. Fidelity Ins. T. & H. D. Co. v. Ro- anoke Iron Co. SI Fed. Rep. 439. Judgment creditors are entitled to be paid out of surplus income real- ized by a receiver apjjointed in a Btocklioldcr's suit prior to the filing of a bill of foreclosure in which he was subsequently appointed in pref- erence to the mortgage debt. Veatch v. American Loan cC- T. Co. 49 U. S. App. 191, 79 Fed. Rep. 471, 25 C. C. A. 39. Judgments recovered against an insolvent corporation after the ap- pointment of a receiver, whether en- tered by leave of court or not, are not such liens on the corporate real es- tate as to be entitled to preference in the distribution of the receiver- ship funds. Cowan v. Pennsylvania Plate Glass Co. 184 Pa. 1. Judgment creditors' liens lost by laches are not entitled to priority. Savings & T. Co. v. Bear Valley Irrig. Co. 89 Fed. Rep. 32. An order appointing a receiver of moneys receivable by a corporation from its interest in a ship and her freight does not confer on a judg- ment creditor any charge on the cor- poration's property, so as to' make him a secured creditor, and is not equivalent to a seizure of the prop- erty in execution. Croshaiv v. Lynd- hurst Ship Co. [1897] 2 Ch. 154, 66 L. J. Ch. N. S. 576, 76 L. T. N. S. 553. Judgment creditors are entitled to priority though the judgment is aft- er the appointment but before the decree in an action to administer the property of a corporation. Moore v. Southern States Land & Timber Co. 83 Fed. Rep. 399. A judgment entered nunc pro tunc antedating the appointment is not entitled to priority over other cred- itors. Coican V. Pennsylvania Plate Glass Co. 184 Pa. 1. Nor is one entered after the ap- pointment, though suit was com- menced prior. Lang v. Macon Constr^ Co. 101 Ga. 343. A covenant in a lease of a rail- road, that the gross earnings shall be applied first to .satisfy obligations assumed by the lessee of the lessor "as common carrier, warehouseman, or otherwise," and thereafter to pay- ment of the interest on mortgage bonds of tlie lessor, does not give pri- ority in earnings of the roa(l in the hands of receivers of the lessee, to a judgment uj)on a note made by the lessor company. WcUloi Sat. Hank V. Parsons, 57 U. S. App. 13(i, sub 135 § 343 RECEIVERSHIPS— SUPPLEMENT. nom. Wcldcn Xat. Bank v. timith, 86 Fed. Kcp. 398, 30 C. C. A. 133. The holders of judgments against a railroad, who are given a lien pri- or to the mortgage, are entitled to priority over of the earnings of the receiver appointed under a general creditors' bill. Thomas v. Cincin- nati, N. 0. <£ T. F. R. Co. 91 Fed. Rep. 202. A plaintilf in a general creditors' bill against an insolvent corporation, who bases his claim on a judgment against the company for a specified amount for breach of a contract by the company to construct a depot and perform other agreements made as a consideration for the con- veyance to it by plaintiff of land for a right of way, does not occupy the position of a right-of-way claimant in the creditors' bill as to preference in the funds in the hands of a re- ceiver. Croshy v. Morristoicn & G. CI. li. Co. (Tciin. Ch. App.) 42 S. W. 507. For personal injuries and death. A claim for damages for personal injuries resulting from a negligent act of a mortgagor railroad company, committed before the appointment of a receiver in a suit to foreclose the moi-tgage, is not a preferential claim entitled to be paid out of the income or corpus of the mortgaged property, to the exclusion of the mortgage debt. Veatch v. American Loan d T. Co. 4'J U. S. App. 191, 79 Fed. Rep. 471, 25 C. C. A. 39. Claims for injuries by the negli- gence of a railroad company prior to the appointment of a receiver, but after the execution of and recording of mortgages upon the road, cannot be given precedence over the mort- gage liens in the funds in the hands of the receiver. Farmers' Loan & T. Co. v. Northern P. R. Co. 74 Fed. Rep. 431. Expenditure by a receiver of in- come for improvements and altera- tion of a railroad will not entitle claims for personal injuries to pref- erence on the ground that such ex- penditure was a diversion, where the mortgage clearly authorizes an ex- penditure of the income of the mort- gaged property for such purposes by 136 the trustee. Y catch v. American Loan d T. Co. 49 U. S. App. 191, 79 Ftd. Rep., 471, 25 C. C. A. 39. Claims for damages caused by negligence in the operation of a mortgaged railroad cannot be paid as preferential claims out of the as- sets in the hands of the receiver. Front Street Cable R. Co. v. Drake, 84 Fed. Rep. 257. The holder of a judgment for per- sonal injuries against a railroad company cannot claim preference to a mortgage debt out of the assets in the hands of a receiver because an- otlier railroad company while operat- ing the road of the mortgagor and judgment debtor has expended in- come in making permanent improve- ments instead of appropriating it as required by the contract to the pay- ment of operating expenses, as the breach of such provision can be com- plained of only by the company own- ing the road, since such company could itself have made such expendi- ture. Veatch v. American Loan & T. Co. 49 U. S. App. 191, 79 Fed, Rep. 471, 25 C. C. A. 39. The holder of a judgment against a railroad company for negligent death is not entitled to preference over mortgage indebtedness in the assets in the hands of a receiver, be- cause execution and levy upon the judgment were prevent«a by a writ of error and supersedeas, on the ground that the surety, having saved the property from seizure and sale, is entitled to protection, and such creditor can avail himself of such equity, as the surety, having re- quired no indemnity, must be held to have signed the bond on the per- sonal credit and responsibility of the principal. 'Seic York Security d i'. Co. V. Louisville, E. d St. L. C. R. Co. 79 Fed. Rep. 380. For taxes. City taxes assessed against a mu- tual insurance company after it had ceased to do business and before the filing of a petition for the forfeiture of its charter are entitled to a pref- erence in the funds in the hands of a receiver, under R. 1. Gen. Laws. chap. 50, § 3, providing that when any per- son (which includes a corporation )_ CLAIMS AGAINST RECEIVERSHIP FUNDS. 842 shall become insolvent to\vn taxes shall have preference over general debts. Insurance Commissioner v. Commercial Mut. Ins. Co. 20 R. I. 7. The absence of any effectual stat- utory method for the enforcement of tax liens which have accrued at the time of the appointment of a receiver of an insolvent corporation under the New Jersey corporation act 189G does not prevent the allowance of such liens as a preferred claim, as the possession of the assets of the corporation by the court through the receiver for distribution is in itself a clear source of jurisdiction for the enforcement of the lien. Duryee v. United States Credit System Co. 55 N. J. Eq. 311. For labor, supplies, and other operat- ing expenses. For labor claims allowed, see Putman v. Jacksonville, L. & St. L. R. Co. 61 Fed. Rep. 440. A percentage on sales allowed an employee of a corporation in addi- tion to his regular stated salary constitutes a part of his salary, un- der X. Y. Laws 1885, chap. 376, giv- ing employees of corporations of which a receiver has been appointed the right to payment of wages out of the money which first comes into the receiver's hands. Re Luxton & D. Co. 35 App. Div. 243. A traveling salesman of a corpo- ration under a contract of employ- ment by the year is within N. Y. Laws 1885, chap. 376, providing that where a receiver of a domestic corpo- ration shall be appointed the wages of the "employees" shall be preferred to all other claims. Re Fitzgerald, 21 Misc. 226, Disapproving Re Strylcer, 73 Hud, 327. An employee of a corporation un- der a contract of employment by the year is not negligent, so as to de- prive him of a preference for his wages on the appointment of a re- ceiver a month after the expiration of the year, where his wages were not due until the ond of the year, un- der N. Y. Laws 188.1. chap. 376, giv- ing a preference to the wages of em- ployees on the appointment of a re- ceiver for a corporation. Ibid, Dis- tinguishing Re Scott, 148 N. Y. 588. One employed by a manufacturing corporation to set up, take down, and repair reapers and mowers, and to unpack and repack them, is with- in N. Y. Laws 1885, chap. 376, pro- viding that where a receiver of a cor- poration organized and doing busi- ness in the state, other than insur- ance and moneyed corporations, shall be appointed, the wages of the em- ployees, operatives, and laborers thereof shall be preferred, although he was also employed to sell ma- chines. Palmer v. Van Santvoord^ 17 App. Div. 194. A manager of a manufacturing corporation, who does not engage in the performance of manual labor, or render any other service than the general supervision of the affairs of the company, is not an employee within N. Y. Laws 1885, chap. 376, giving a preference to employees for wages in the funds in the hands of a receiver of the corporation. Re American Lace & t\ P. Works Direct- ors, 30 App. Div. 321. A traveling salesman for a firm is an employee within the New York statute, and entitled to a preference for his wages, on a dissolution of the firm and the appointment of a re- ceiver. Mayer v. Stern, 47 N. Y. Supp. 965. Debts due the employees of a rail- road company at the time a receiver of all its property is appointed, up- on the application of tlie mortgagee in an action to foreclose his mort- gage, have a preference in equity over any claim of the mortgagee in the earnings which may come to the receiver while he is so operating the road. Franklin Trust Co. v. Yorf/i- ern Adirondack R. Co. 11 App. Div. 249. A receiver appointed to take pos- session of and operate a railroad pending foreclosure of a mortgage thereon, and to make all repairs, and keep up a proper standing of effi- ciency, and pay all such expenses out of the assets, income, and profits, is entitled to a credit for expendi- tures for necessary repairs and taxes, as against employees of the road having chilnis for wages due at the time of liis appointnicnt, there being no direclion in the order of 137 %Ui RECEIVERSHIPS— SUPPLEMENT. his appointment for paying such claims. Ibid. A receiver appointed in an action for the foreclosure of a mortgage up- on a railroad, to take possession of the road and operate the same pend- ing the action, is not such a receiver as is contemplated by N. Y. Laws 1885, chap. 376, providing that where a receiver of a corporation shall be appointed the wages of employees shall be preferred to any other debt or claim against the corporation, and shall be paid by the receiver from the moneys of such corporation which shall first come to his hands. Ibid. The provision in Burns's (Ind.) Rev. Stat. 1894, § 7058, which makes all debts due any person for manual or mechanical labor a preferred claim against a corporation whose property is in the hands of a receiv- er, does not include contractors en- gaged to complete certain work for an agreed sum. Anderson Driving Park Asso. v. Thompson, 18 Ind. App. 458. The usual rule is to give claims for materials and labor for six months preceding the appointment of a receiver of a railroad corpora- tion preference over prior bonds. Rutherford v. Pennsylvania Midland R. Co. 178 Pa. 38. A creditor of a corporation on ac- count of material and labor fur- nished more than six months prior to the appointment of a receiver can- not complain of the action of the court in permitting the issuance of receiver's certificates to be liens on the property prior to the mortgage bonds, on account of similar claims accruing within the six months. lUd. A chemist performing services in his profession in the analysis of met- als for an iron company is not en- titled to preference as a laborer to funds in the hands of a receiver of such company under the Pennsyl- vania wages act, although the same work miglit have been done by any ordinarily intelligent man. Culluni V. Lickdale Iron Co. 5 Pa. Dist. R. 622. Claims for labor performed for a corporation are not entitled to pri- 138 ority in a fund in the hands of the receiver of a copartnership, arising out of the sale by him of its property to the corporation, discharged of all liens against the partnership, under Iowa Laws 23d Gen. Assem. chap. 48, Iowa Code, § 3079. Haw v. Burch (Iowa) 77 N. W. 401. The receiver of a manufacturing company can derive no authority of the court, except in railway cases, to pay labor claims in preference to the liens of mortgages. Merchants' Bank v. Moore, 100 Ala. 646. The purchase price of products sold, in the hands of a receiver, is a fund to which employees whose wages accrued within six months have priority. Drennen v. Merean- tile Trust d Deposit Co. 115 Ala. 592, 39 L. R. A. 623. Employees of a corporation in the hands of a receiver on foreclosure of a mortgage have a perfect equity to priority of payment of wages earned within six months before the receiv- er's appointment, when the funds from which they ought to have bee.i paid have been used for the benefit of the bondholders, even if the terms of the mortgage embrace income. Ibid. Labor necessary to the continua- tion of the business of a corporation does not entitle the workmen to pri- ority of payment out of the assets of a receiver on foreclosure of a mortgage, if the labor is not shown to have been to the advantage of the bondholders, or necessary in conser- vation of their interests, or if the receiver has not realized any income out of which the wages should be paid. Ibid. Mere casual and incidental re- pairs to remedy defects caused by current use are not improvements or betterments within the rule which gives priority to wages out of the as- sets of a receiver of a corporation when funds that should have been used to pay wages have gone into improvements. Ibid. Assignees of employees may have their priority of payment out of the assets of a receiver. Ibid. A receiver of an insolvent corpo- ration appointed under the general equity powers of the court will rec- CLAIMS AGAINST RECEIVERSHIP FUNDS. § 343 ognize and enforce preferences which would be accorded to taxes and debts due to workmen for labor in a legal proceeding. Jones v. Arena Publish- ing Co. 171 Mass. 22. A purchaser of partnership prop- erty at a sale under foreclosure of a deed of trust, while the property was in the hands of a receiver appointed in an action to dissolve the firm, is estopped to assert his title to defeat a charge upon the property in favor of persons who furnished the sup- plies to the receiver necessary to the operation of the business of the firm, •while the property remained in his possession with the consent of the purchaser pending an appeal from an order directing him to turn the same over to the purchaser. Knicker- hacker v. McKindley Coal & M. Co. 172 111. 535, Affirming 67 111. App. 291. The lien of employees of a firm, for labor performed by them, is su- perior to the lien of a mortgage on personal property belonging to the firm, where the partnership goes in- to the hands of a receiver, under i2 Starr. & C. (111.) Stat. p. 25S6, pro- viding that when the business of any firm is put into the hands of a re- ceiver the debts owing to laborers for labor shall be treated as preferrel claims and be first paid in full. Dolese v. Shepard (111.) 2 Chic. L. J. Wkly. 478, Citing Reynolds v. Black, 91 Iowa, 1 ; Piatt v. Union P. R. Co. 99 U. S. 48, 25 L. ed. 424; Walker v. Whitehead, IG Wall. 314, 21 L, ed. 357. The amount due for material used in the construction of rolling stock is entitled to priority over the mort- gage. St. Louis, A. d S. R. Co. v. Cretcs, 75 111. App. 496. And so as to labor and material necessary to keep a railroad a going concern. Cleveland, C. & S. R. Co. V. Knickerbocker Trust Co. 86 Fed. Rep. 73 : Southern R. Co. v. Carnegie Steel Co. 76 Fed. Rep. 492, 42 U. S. App. 145, 22 C. C. A. 289. And as to the cost of replacing an old bridge where it has become un- safe. Cleveland, C. & S. R. Co. v. Knickerbocker Trust Co. 80 Fed. Rep. 73 ; Southern R. Co. v. Ameri- can Brake Co. 76 Fed. Rep. 502, 42 U. S. App. 162, 22 C. C. A. 298; Southern R. Co. v. Adams, 42 U. S. App. 167, 76 Fed. Rep. 504, 22 C. C. A. 300. A corporation which assumes the operation of the railroad of another corporation by its lessee, all the earnings of both roads being depos- ited in a common fund out of which wages and supplies are purchased generally by the lessee for the bene- fit of both roads, is not entitled to a lien for supplies and labor furnished for the amount shown to be due from the company for which such road is operated, upon its assets in the hands of a receiver, but such amount is for money advanced. United States Trust Co. v. Western Con- tract Co. 54 U. S. App. 67, 81 Fed. Rep. 454, 26 C. C. A. 472. The compensation of the manager and of the secretary and treasurer of a corporation is not within Va. Code, § 2485, giving a lien upon the personal property of a mining or manufacturing corporation for wages, so as to entitle him to a lien upon its assets in the hands of a re- ceiver. Fidelity Ins. Trust d S. D. Co. V. Roanoke Iron Co. 81 Fed. Rep. 439. A transfer by an iron company, of which a receiver is afterwards ap- pointed, of iron, accompanied by a bill of lading, to factors who make advances thereon and are to sell the same and account therefor to the company, deprives the company of any property in the iron, to which the lien given by Va. Code, § 2485, upon the personal property of a man- ufacturing company for supplies can attach. Ihid. Labor claims against a railroad, which accrued more than six months before the appointment of a receiver, cannot be given priority of payment out of the funds in his hands. Thomas v. Cincinnati, N. 0. d T. P. It. Co. 91 Fed. Rep. 195. Services of a laborer in repairs and improvements upon a water- works cannot be given preference to a mortgage lien in the assets in tlic liands of a rcceivcM-, where tlieio is no diversion of income. At- lantic Trust Co. V. Woodbridgv Canal & Irrig. Co. 79 Fed. Rep. 39. 139 342 RECEIVERSHIPS— SUPPLEMENT. Expenses of proceedings to record a mechanic's lien cannot be given preference in funds in the hands of a receiver, where all claim to prefer- ence is based upon the ground that the nature of the services rendered gives them an equity superior to that possessed by the bondholders, and not upon the fact of the lien ac- quired. Atlantic Trust Co. v. Wood- hridyc Canal d I nig. Co. 86 Fed. Rep. 975. Services of a laborer in construc- tion of waterworks cannot be given a preference in the assets in the hands of a receiver to a mortgage lien. Atlantic Trust Co. v. Wood- bridge Canal <£- Irrig. Co. 79 Fed. Rep. 39. Preference for the construction of an extension canal system cannot be given in funds in the hands of a receiver of the canal company, on the ground tliat they were incurred to keep the system a going concern, because prior to such extension the company- was not a paying concern, where it does not appear that the property was thereby placed upon a paying basis. Atlanta Trust Co. v. Woodhridge Canal & Irrig. Co. 86 Fed. Rep. 975. A claim for services rendered purely in constructing an addition to a system of canals which was never completed or in operation can- not be given preference in funds in the hands of a receiver over claims of bondholders. Ihid. Services or materials rendered in extending a system of canals owned by a corporation are not necessary to the preservation of the existing canals and ditches, so as to give a claim therefor priority in the funds in the hands of a receiver appointed in a mortgage foreclosure. Ibid. Services of a laborer in the opera- tion of a waterworks, keeping it a going concern, may be entitled to preference even out of the corpus of the assets in the hands oi a receiver over a mortgage lien. Atlantic Trust Co. V. Woodhridge Canal & Irrig. Co. 79 Fed. Rep. 39. A lien for laborer's wages taking precedence of mortgages in assets in a receiver's hands under the Vir- ginia statute is invalid when based 140 upon notes given by a corporation for labor, and there is notliing to show wlien the labor was performed or when the claims therffor were due, as the statute does not contem- plate that the company may give its note, and that when such note is due ninety days shall be allowed there- after to hie a memorandum of the lien. Liberty Perpetual BIdg. tC- L. Co. V. M. A. Furbush & tion Mach. Co. 42 U. S. App. G31, 80 Fed. Rep. 031, 26 C. C. A. 38, Citing Boston v. Chesapeake & 0. R. Co. 76 Va. 182; ShacJcleford v. Beck, 80 Va. 573; Mayes v. Ruffners, 8 W. Va. 384; Phillips V. Roberts, 26 W. Va. 783; Davis V. Livingston, 29 Cal. 283; Hooper v. Flood, 54 Cal. 218; Noll V. Sicineford, 6 Pa. 187: Wit man v. Walker, 9 Watts & S. 186; Thomas v. Barber, 10 Md. 380; Delaicare R. Constr. Co. v. Davenport c6 ^t. P. R. Co. 40 Iowa, 406; Valentine v. Raw- son, 57 Iowa, 179; Lyon v. 'New York & N. E. R. Co. 127 Mass. 101 ; Mul- loy V. Lawrence, 31 Mo. 583; Cook v. Vreeland, 21 111. 431; Vane v. New combe, 132 U. S. 220, 33 L. ed. 310; Van Stone v. Stillicell & B. Mfg. Co. 142 U. S. 128, 35 L. ed. 961. Services in the construction of lateral ditches from the main canals of an irrigating system are not en- titled to preference over a mortgage debt in the assets in the hands of a receiver, on the ground that such laterals are extended from time to time as required in the actual opera- tion of such system. California Safe Dcp. & T. Co. v. Yakima Invest. Co. 82 Fed. Rep. 542. Services of a civil engineer, per- formed in the original construction of the works of an irrigating com- pany, do not constitute a claim en- titled to preference over a mortgage debt in the funds in the hands of a receiver. Ibid. Employees are not creditors at large, but, as against mortgagees, will be preferred out of earnings and corpus. Duncan v. Chesapeake & 0. R. Co. (Va.) 9 Am. Ry. Rep. 386. The court refuses to give claims for labor preference to all others. Case V. Fredrickson, 63 Wis. 501. The lien given by Va. Code, § 2485, to supply creditors in prefer- CLAIMS AGAINST RECEIVERSHIP FUNDS. t^ 342 ence to any lien by deed of trust, mortgage, hypothecation, sale, or conveyance preA'iously made, in the assets of a receivership, takes prece- dence of a pledge to a warehouse company to secure advances made after the passage of such statute. Fidelity Ins. Trust d 8. D. Co. v. Roanoke Iron Co. 81 Fed. Rep. 439. Goods furnished a commissary store conducted by an iron company, upon which it frequently gave its employees, in payment of their wages, orders for goods and supplies, are not within Va. Code, § 2485, giv- ing a lien upon the property of a mining and manufacturing com- pany for supplies necessary to its operation, so as to give a lien upon its assets in a receivers' hands, where the company is located in a city where supplies of every kind are readily accessible to its employees, and not in so remote a locality that furnishing by it of supplies to its employees is necessary. Ibid. Freight charges on supplies by a railroad comjDany against a manu- facturing company, of which a re- ceiver is afterwards appointed, are not within Va. Code, § 2485, giving to a person furnishing supplies to a mining or manufacturing company a prior lien upon its personal property to the liens of mortgages or other transfers. Ibid. The right of a preference over mortgage bondholders of one furnish- ing supplies to a cable street-railway company in Colorado is not waived by suing such company in the courts of New York before receivers are ap- pointed, although the suit is prose- cuted to judgment after his appoint- ment. Central Trust Co. v. Clark, 49 U. S. App. 453, 81 Fed. Rep. 269, 26 C. C. A. 397. Priority may be given in funds in the hands of a receiver to supply bills furnished shortly before or aft- er his appointment, although he was originally appointed upon the application of a stock and bondhold- er merely to hold the system intact and protect the company from its creditors, where the mortgagees liave come in, asked for a receiver, and had tlie existing receivership modi- fied so as to give it retroactive effect as of the time of its original creation. J\'eto England R. Co. v. Carnegie Steel Co. 33 U. S. App. 491, 75 Fed. Rep. 54, 21 C. C. A. 219. A provision for the sequestration by foreclosure of the income of a railroad for the benefit of the bond- holders will not prevent the income from being charged with the prior equity of unpaid supply claimants until a strict foreclosure or a sale of the road. Virginia & A. Coal Co. v. Central R. d Bkg. Co. 170 U. S. 355, 42 L. ed. 1068. Supplies furnished a lessee of a road are entitled to a preference over payments made by such lessee on the interest of outstanding bonds of the lessor. Southern R. Co. v. Tillett, 42 U. S. App. 173, 76 Fed. Rep. 507, 22 C. C. A. 303. Persons selling personal property to a receiver carrying on the busi- ness of a corporation, with knowl- edge of the order of court under which he is acting, cannot claim a return of a portion of the property not used, but stand on the same foot- ing as other creditors who furnished supplies. Lewis v. Linden Steel Co. 27 Pitts. L. J. N. S. 395. Labor and materials used in re- building the pier and abutments of a railroad bridge are within an order directing receivers to pay out of net income claims for materials and sup- plies accruing within six months. Cleveland C. & 8. R. Co. v. Knicker- bocker Trust Co. 86 Fed. Rep. 73. Supplies for the purpose of recon- structing a railroad cannot be given preference in the assets in a receiv- er's hands to a mortgage, even on the ground that they must have en- hanced the value of the bondholders' security. Lackawanna Iron & C. Co. v. Farmers' Loan d T. Co. 52 U. S. App. 91, 79 Fed. Rep. 202, 24 C. C. A. 487 ; Morgan's L. d T. R. d 8. 8. Co. v. Fanners' Loan d T. Co. 52 U. S. App. 107, 79 Fed. Rep. 210, 24 C. C. A. 495 ; Southern Develop- ment Co. V. Farmers' Loan d T. Co. 52 U. S. App. Ill, 79 Fed. Rep. 212, 24 C. C. A. 497. » The court may reject the claim of a mining corporation, wliich has no basis except in equity, to the pay- ment out of the assets in the hands 141 § 342 EECEIVERSHIPS— SUPPLKMENT. of the receiver of a railroad corpora- tion of a bill for coal furnished to the company within three months be- fore the appointment of the receiver, Avhere the mining company is prac- tically identical with another rail- road company which has assumed the paj-ment of the current expenses of tiie first railroad company, al- though the two are legally distinct. Guaianttc Trust d- S. D. Co. v. Fhila- ihiphia R. d N. E. R. Co. 31 App. Div. 511. Receivers of a railroad company, under an order directing payment of claims for supplies furnished on or after a certain date, practically six months before the receivership, can- not pay claims incurred for supplies delivered to a carrier, consigned to the railroad company, before such date, but falling due thereafter. Belknap v. Central Trust Co. 47 U. S. App. 6G3, sub nam. Central Trust Co. v. East Tennessee, V. ermission of the court for a fixed compensation, and not to the mortga- gee, in case they are doterminc^d to be within the terms of the mortgage. Western U. Tclcg. Co. v. Boston iiufc Dep. d T. Co. 87 Fed. Rep. 788. Rentals due before appointment are not preferential over lien credit- ors. Grand Trunk R. Co. v. Central Vermo7it R. Co. 90 Fed. Rep. 103. Page 582, sec. 350. — Compensation. A receiver who after the death of a coreceiver continues to act, and ■whose acts were ratified by the court, is entitled to commissions. Bur- roughs V. Bunnell, 70 Md. 18. A receiver is entitled to a com- mission on deposit notes coming into his hands and surrendered on order of court. Van Buren v. Chenango County Mut. Ins. Co. 12 Barb. 071. Receivers are usually allowed such compensation as is allowed by law or by contract between individuals for similar services, to be ascertained by proof, but not from opinions of wit- nesses. Stretch v. Gowdey, 3 Tenn. Ch. 565. A receiver is entitled to commis- sions on all property (personal) of which he became possessed and which he transferred. Bennett v. Chapin, 3 Sandf. 673. Where the Federal court has passed upon and allowed a receiver's compensation, it will not entertain a petition for an allowance based o.a a finding in the state court in an- other case. Re Hinckley, 3 Fed. Bep. 556. Partial or intermediate allowances 144 of compensation to a receiver, or his counsel, of an insolvent corporation, clothed with the duty of winding up its aflairs with convenient speed, should be materially less than the value of the services rendered by the receiver prior to the making of such allowances; and the final allowance made at the close of the receivership should be so adjusted tliat the re- ceiver will have fair and just com- pensation for his services as a whole, notwithstanding the inadequacy of the partial or intermediate allow- ances considered by themselves. Maxwell v. Wilmington Dental Mfg. Co. 82 Fed. Rep. 214. The receiver of a mutual insur- ance company is entitled to com- missions on the value of deposits or premium notes coming into bis hands. Van Buren v. Chenango County Mut. his. Co. 12 Barb. 071. The want of foresight in regard to the future development of the business is not ground for refusing compensation to a receiver. Coicd- rey v. Galveston, E. & II. R. Co. 1 Woods, 331. A compensation of 8 per cent is RECEIVERS' COMPENSATION. § 350 not uniform^ but it varied with each case. Abbott v. Baltimore d R. Steam Packet Co. 4 Md. Ch. 310. The court has a right to fix the ex- penses of a receivership when the appointment is made. Hoicell v. DaicsoH, L. R. 13 Q. B. Div. 67. The compensation of a temporary receiver of a corporation appointed under X. Y. Code Civ. Proc. § 2423, to collect and receive debts, preserve the property, and sell or otherwise dispose of the property as directed by the court, and collect and preserve proceeds, is not confined to cash re- ceived by him, but may be reckoned at not more than 214 per cent of the value of other property coming into his hands, under § 3320, providing for the pajTnent to receivers as com- missions not exceeding 5 per cent of the "sums received and disbursed" by him. Re Wanen E. Smith Co. 31 App. Div. 39. The compensation of a receiver and the expenses of the receivership will not be deferred to the payment of existing liens, where the appoint- ment of the receiver is legal, al- though it was made without preju- dice to the pre-existing liens, and the assets are insufficient to pay them and the expenses of the receiv- ership. Gallagher v. Gingrich, 105 Iowa, 237. In this case the receiver was al- lowed poundage though his report had been delayed at the request of the parties. Purcell v. Woodley, 10 Ir. Eq. Rep. 422. A receiver of a corporation is en- titled to compensation for his serv- ices rendered after the revocation of his appointment, where he has no of- ficial notice of such revocation. New Birmingham Iron d Land Co. V. Blevins (Tex. Civ. App.) 40 S. VV. 829. Where the object of a consent is to appoint a receiver over an outstand- ing estate the salary should be fixed by the consent. Burke v. Burke, Flan. & K. 89. An allowance to a receiver of ho- tel property, being 10 per cent of the receipts of the business and amount- ing to about $2,500, for his services from May to DeccmlK-r, during which he spent ordinarily only his evenings 10 at the hotel and employed a man- ager at $125 or $150 per month and under bond, will not be disturbed on appeal after it has been approved by two lower courts, where there is testimony by hotel proprietors that $5,000 a year was fair compensation, and he had no compensation for the custody and responsibility of a large amount of personal property, and the position was attended with con- siderable anxiety, and he retained it apparently against his own inclina- tions, in compliance with the wishes of the party in interest. Cake v, Mohun, 164 U. S. 311, 41 L. ed. 447. A judgment creditor of a receiver cannot maintain an action to compel him to fix the value of his services and pay the same to such creditor, as it is the duty of the court to fix the compensation of the receiver. Hamburger v. Darusmont, 3 Ohio N. P. 222. Where the order of the court in reference to a receiver's commission is in its discretion it will not be in- terfered with except for abuse. Hembree v. Dawson, 18 Or. 474. The compensation of a receiver and the manner of payment should be fixed in the final decree. Cutter v. Pollock, 4 N. D. 205, 25 L. R. A. 377. A purchaser who allows the re- ceiver to continue in possession un- til the title is declared good is bound to pay the receiver's fees. Brown v. Dowdall, 2 Hogan, 198. The purchasers of a railroad at foreclosure sale are not interested to contest the compensation allowed the receiver out of the proceeds. 'Northern Alabama R. Co. v. Hop- kins, 59 U. S. App. 74, 87 Fed. Rep. 505, 31 C. C. A. 94. Compensation of receiver and counsel fees should not be fixed ex parte and without notice. Mer- chants' Bank v. Cryslcr, 32 U. S. App. 187, 07 Fed. Rep. 388, 14 C. C. A. 444. The only question was a question before the jury as to receivers' fees and the court held that the instruc- tions were correct. Wilkins v. Georgia Iron Works, 74 Ga. 532, 533. By agreement of the parties one of them may become liable for the pay- 145 § 350 RECEIVERSHIPS— SUPPLEMENT. ment of the receiver's commissions. Kelsey v. Sargent, 40 Hun, 150. An order requiring a receiver to pay over all funds in his hands, with- out regard to his commissions, is un- just. Galster v. Syracuse Sav. Bank, 29 Ilun, 594. The basis of a receiver's commis- sion should be the same as that of trustees under a will, llolcombc v. Holcomhc, 13 N. J. Eq. 415, 417. For question of receivers' compen- sation as between them and trustees in bankruptcy, see Ellis v. Boston, H. d- K. R. Co. 107 Mass. 1. A receiver is entitled to poundage except in cases of e.xecutors, trustees, etc. Bevan v. White, 8 Ir. Eq. Rep. 675. A receiver of a building and loan association may be allowed a fee for transferring shares upon the books- of the association. Chapman v. Young, 05 111. App. 131. There is no general rule as to com- pensation of receivers. Day v. Croft, 2 Beav. 488. The compensation is payable from time to time. Special Bank Comrs. V. Franklin Inst, for Sav. 11 R. 1. 557. The fees of a referee appointed to report as to the amount of compen- sation of a receiver who has been re- moved and who has applied for pay- ment of his commission, must be paid by the latter if the report is in his favor. Atty. Gen. v. Continertr tal L. Ins. Co. 27 Hun, 524. Page 582. — (a) Must he reasonable. Compensation is not determined by the amount passing through the receiver's hands, but must be such as would be reasonable for services rendered by a person competent to perform the duties. Jones v. Keen, 115 ]Mass. 170. Compensation was held to be rea- sonable in McArthur v. Montclair R. Co. 27 N. J. Eq. 77. Compensation fixed by responsibil- ity, skill, labor, and rate usually al- lowed. Special Bank Comrs. v. Franklin Inst, for Sav. 11 R. I. 557. A report that a receiver's compen- sation is reasonable, made by a mas- ter and sustained by competent evi- dence, will not be disturbed. Karn V. Rorer Iron Co. 86 Va. 754. A special order was made that such compensation should be made a re- ceiver as the judge should think rea- sonable. Neave v. Douglas, 2G L. J. Ch. N. S. 756. The amount which the receiver of a corporation would be able to earn at his profession during the time covered by the receivership does not necessarily furnish a criterion for determining the amount of his com- pensation as receiver ; but the amount for which another person possessing equal qualifications could have been employed to perform the services is ordinarily a fair and rea- 146 sonable criterion. United States Nat. Bank v. National Bank, 6 Okla. 163. An attorney of a creditor should not be appointed as the attorney of a receiver of an insolvent estate; but an attorney so appointed may receive a reasonable compensation for his services, if no objection to his ap- pointment was made to him or to the court. Geyser Min. Co. v. Bank of Salt Lake, 16 Utah, 163. In fixing the compensation to be allowed the receivers of an assigned estate and their solicitors, the court should determine from the evidence how much is usually paid to persons possessing the requisite capacity and experience for like services under similar responsibilities. Ibid. The court cannot determine what is reasonable compensation for the services of the attorney of a receiver, in the absence of evidence on that subject, although it is familiar with what has actually been done by him. Uammond v. Atlee, 15 Tex. Civ. App. 267. The judges of the court in passing on the reasonableness of charges by the receiver of an insolvent for coun- sel fees for himself and other attor- nej's employed by him may right- fully use their personal knowledge as to what has been done by the attor- RECEIVERS' COMPENSATION. § 350 neys, and also take into considera- tion the character of legal services theretofore rendered by counsel, and the amount already allowed on ac- count thereof. Olson v. State Bank, 72 Minn. 320. What another competent person would have done the work for is not proper evidence in fixing the com- pensation for receiver. Cowdrey v. Galveston, H. & H. R. Co. 1 Woods, 331. Page 586. — (c) Sometimes a salary. A receiver who was placed upon the pay roll at a monthly sum as an allowance upon his compensation as receiver should be allowed such monthly sum after the sale of the railroad for which he was appointed and the payment of a sum as a com- promise for his services, where none of the parties interested moved to reduce such allowance or discharge such receiver, and he was allowed to go on as such, with all the responsi- bilities attached to the position and to the business in hand, and his ac- count had been filed and stood, pre- sumably approved by the court, up to within two years of the time when the question was raised, although within such two years objection was made and overruled. Dillinghani v. Moran, 52 U. S. App. 425, 81 Fed. Rep. 759, 26 C. C. A. 596. Page 587. — (d) WTien compensation refused. A receiver is not entitled to com- pensation for the collection and dis- bursement of the government tax on ■whisky which belongs to third par- ties. White V. Allen, 10 Ky. L. Rep. 1025. Fees of trustees will not be al- lowed from a trust fund when they are extravagant. Trustees v. Green- ough, 105 U. S. 527, sub nom. Inter- nal Improvement Fund v. Green- ough, 26 L. ed. 1157. The compensation of a receiver, and expenses incurred during the re- ceivership other than those which would necessarily have been incurred had no receiver been appointed, can- not be allowed out of the funds in his hands, where his appointment has been revoked, but they constitute charges against the parties procur- ing his appointment. Ogden City V. Bear Lake & R. W. & I. Co. 18 Utah, 279. As to when defendants were re- quired to pay the compensation of the receiver — see Hayes v. Ferguson, 16 Lea, 1. Compensation may be denied to the receiver of a corporation where he has kept no proper accounts, and has put the court to a groat deal of trouble in determining his rights, or has negligently or wilfully misman- aged the estate. United States Nat. Bank v. National Bank, 6 Okla,. 163. While a receiver's right to com- pensation and allowance for ex- penses does not depend upon the cor- rectness of the order of appointment, nevertheless he is not entitled to compensation out of the fund or property received by him under such order, where its enforcement has been subjected to the check^ of a writ of prohibition on the ground that it was unauthorized on making return to such writ, but is only entitled thereto on his accounting with the court in the suit wherein he was ap- pointed. St. Louis, K. d S. R. Co. v. Wear, 135 Mo. 230, sub nom. State St. Louis, K. & S. R. Co., v. Wear, 33 L. R. A. 341. A partner appointed receiver is not entitled to compensation. Berry V. Jones, 11 Ileisk. 206. A receiver is not entitled to com- pensation for attending a survey of minor's estate, no order being ob- tained. Re Ormsby, 1 Ikill & 15. 189. Full comi)ensation is not allowed a second receiver for funds collected by tlie first receiver and turned over. Atti/. Gen. v. Continental L. Ins. Co. 32 Hun. 223. 147 § 350 EECEIVEllSHIPS— SUPPLEMENT. Page 587. — (e) When to he ^yaid Ijy plaintiff. An order for the appointment be- ing reversed, the receiver was di- rected to turn over to the defendant all partnership property held by him, and the plaintiff was ordered to pay the receiver's compensation. Vi^cston v. ^VatU, 45 Hun, 219. The fees of temporary receivers appointed ponding an action to set aside an alleged fraudulent convey- ance of goods are properly chargeable to the plaintilfs therein, where such fees were incurred in converting such goods into cash, of which such plaintill's received the benefit. lioun- saville v. Lanyston, 9t) Ga. 117. Page 589. — (h) Additional allowoMces. The compensation of temporary receivers of corporations, for which no specific provision is made by stat- ute, is governed by N. Y. Ck)de Civ. Proc. § 3320, providing that a re- ceiver, except as otherwise pre- scribed by law, is entitled, in addi- tion to his lawful expenses, to such commissions, not exceeding 5 per cent of the sums received and dis- bursed by him, as the court by which he is appointed allows. Re ^Yarren E. Smith Co. 31 App. Div. 39. The receiver of an insolvent bank is entitled to credit for a charge of $600 made by a surety company for becoming the surety on his bond for $80,000, under Wis. Laws 1893, chap. 19G, authorizing the execution of a bond by such a company as surety, and Wis. Laws 1895, chap. 219, expressly authorizing a reason- able charge therefor not exceeding 2 per cent. Eamacker v. Commercial Bank, 95 Wis. 359. The objection that a receiver had no standing in court to oppose a mo- tion vacating his appointment, or to make a motion to vacate the leaAe granted another to sue him, is not available for the purpose of defeating his right to an allowance for services on such motions, where the court per- mitted him to be heard and recog- nized him on the motions. Hardt v. Levy, 20 App. Div. 400. Page 590. — (i) Statutory compensation. The compensation of a temporary receiver appointed under N. Y. Code Civ. Proc. § 2423. is not fixed by 2 N. Y. Rev. Stat. p. 470, tit. 4, chap. 8, § 76, which by N. Y. Laws 1880, chap. 245, was made applicable to receivers appointed under N. Y. Code Civ. Proc. § 2429, which relates to permanent receivers only. Re War- ren E. Smith Co. 31 App. Div. 39. As to allowance of expenses and various charges of receivers, — see Re Union Bank, 37 X. J. Eq. 420. Fees of receiver as fixed by N. Y. Code Civ. Proc. § 3220. Re Security Life Ins. & Annuity Co. 31 Hun, 36. A statute relative to the compen- 148 sation of receivers was held to be prospective, in People, Ncwcomb, V. McCall, 99 N. Y. 587. A receiver is an officer of the court, and the court has a right to fix his compensation irrespective of N. Y. Code, § 244, subd. 4. Baldwin V. Eazler, 2 Jones & S. 275. The commissions to be allowed a receiver joined in an action in which a decree was rendered setting aside a general assignment for crt'ditors are not definitely fixed by statute, but are left to the discretion of the court in South Carolina. Mann v. Poole, 48 S. C. 154. REPORTS, ACCOUNTS AND DISTRIBUTION. Page 592, sec. 355. — Reports and accounts. § 355 The report must be full, clear, and specific. Bertie v. Abingdon, 8 Beav. 53. Where a receiver makes default in payment of a balance due from him, payment may be enforced by com- mittal. Re Bell, L. R. 9 Eq. 172. The order on a receiver's account is not appealable. Colgate v. Mich- igan L. 8. R. Co. 28 Mich. 288. On appeals respecting receivers' accounts, it is the practice in this country to entertain objections to the amount of the items. Beytagh v. Concannon, 10 ir. Eq. Rep. 351. In matters pertaining to a receiv- er's account he is entitled to a trial by jury on questions of fact. Hamm V. J. Stone c£ Sons Live Stock Co. 13 Tex. Civ. App. 414. The receiver is entitled to all prop- er legitimate and necessary outlays by him made as receiver. Hardt v. Levy, 20 App. Div. 400. It is the duty of the court, whether objections are made by creditors or not, to supervise and closely scruti- nize the account of a receiver of an insolvent. Olson v. State Bank, 72 Minn. 320. A receiver's account must be filed in court. People v. Knickerhocker L. Ins. Co. 18 N. Y. Week. Dig. 492; Re Burke, 1 Ball & B. 74. After bill is dismissed he should be compelled to account. Pitt v. Bonner, 5 Sim. 577. But a person not a party to the suit has no right to compel him to account. Colburn v. Cooper, 8 Ir. Eq. Rep. 510; Locke v. Ashe, 1 Ho- gan, 143. Nor is he required to unless it is shown that assets have come to his hands. Lyons v. Atlanta Hill Gold Min. d Mill. Co. 38 N. Y. S. R. 892, 14 N. Y. Supp. 533. In passing upon his accounts the court may consider general prinoi- ples upon whicii the master has pro- ceeded in taking the account, but not the items. Shewcll v. Jones, 2 Sim. & Stu. 170. His accounts should be presented at least once a year. Lowe x. Lowe, 1 Tenn. Ch. 515. At least where they are large. Day V. Croft, 6 Eng. L. in Eq. 62. A judge in passing upon the ac- counts of the receiver of a corpora- tion is not bound by the approval of his expenditures by the judge ap- pointing him, even if such judge was a wholly disinterested person and otherwise qualified to act in the premises, where such expenditures were unnecessary and unreasonable. United States Nat. Bank v. Nation- al Bank, 6 Okla. 163. The burden is on the receiver to show the correctness of his accounts. Ibid. Before a receiver is discharged he should pass his accounts and provi- sion be made for his compensation; and if it has been done by agreement of parties the order may be set aside on application of the receiver. Hoff- man V. Bank of Minot, 4 N. D. 473. A final order by the district court, allowing the account of a receiver, and directing the payment of a spe- cific sum for services rendered in con- nection with the receivership, is not within N. D. Rev. Codes, § 5499, pro- viding that "mutual final judgments may be set off pro tanto." Patter- son V. Ward, 8 N. D. 87. A final order allowing the account of a receiver, and directing the pay- ment of a specific sum to one who has rendered services connected with the receivership, creates a demand against the receiver in favor of the claimant, which is free from equities in favor of a judgment creditor of the claimant, and ends the jurisdic- tion of the court over such chiim furtluT tlian to require the payment of tlie amount allowed to the party to whom it is due. Ibid. Rents are enforceable by suit on a bond given in lieu of the appoint- ment of a receiver, and not on motion to compel the obligor to account aa ii receiver, to wiiicli position he waa sul)se(|uently a|)|)oint<'d. Baker v. Baker, 36 App. Div. 485. 149 § 355-357 RECEIVERSHIPS— SUPPLEMENT. Page 593. — (b) Reference to master. Accounts of a receiver, if not as- sented to, should be referred to a master. American Trust & Sav. Bank v. Frankenthal, 55 111. App. 400. If the master adopts an erroneous principal in the matter of a receiv- er's account, it may be referred back for correction. Cowdrey v. Galves- ton, H. & II. 11. Go. 1 Woods, 331. The report of a master on a receiv- er's account requires confirmation. Richards v. Morris Canal & Bkg. Go. 4 N. J. Eq. 428. If the report of the master is not satisfactory it should be excepted to. Mechanics' Bank v. Bank of New Brunsivick, 3 N. J. Eq. 437; Wool- sey V. Gummings Car Works, 33 N. J. Eq. 432. Exceptions to the master's report on a receiver's accounts must first be made before the master. Cow- drey V. Galveston^ H. d H. R. Co. 1 Woods, 331, . Page 594, sec. 357. — Distribution. Money paid by tenants before an extending order belongs to the first petitioner. O'Callaghan v. O'Cal- laghan, 3 Ir. Ch. Rep. 376. Rents collected prior to extension belong to the first plaintiff. Agra & Mastcrman's Bank v. Barry, Ir. Rep. 3 Eq. 443. Rents must be applied according to the legal rights of the parties. Corbet v. Mahon, 2 Jones & L. 071. Rents collected should be applied to the satisfaction of liens. Pepper v. Shepherd, 4 Mackey, 269. Application of rents to discharge of liens. Milhous v. Dunham, 78 Ala. 48, 59. An attachment execution against a corporation in the hands of a re- ceiver is properly served upon him, and when so served the plaintiff in attachment becomes entitled to the dividend in the receiver's hands when declared. Merchant's Nat. Bank v. Binder, 6 Pa. Dist. R. 033. A prior mortgagee who is code- fendant in a proceeding to foreclose a junior mortgage is entitled to rents where he has taken an assignment thereof. Harris v. Taylor, 35 App. Div. 402. A judgment creditor who files a bill in aid of his execution, to remove a prior mortgage as a cloud upon his title, is not entitled to the rents col- lected by a receiver appointed at his instance pending the action, if the mortgage is valid, the mortgagors are insolvent, the property insuffi- cient security, and the receiver was appointed for the benefit of all the parties to the suit, and not for his benefit alone. Cross v. Will County Nat. Bank, 177 111. 33. Rents may be applied on taxes, insurance, and repairs. American Nat. Bank v. Northwestern Mut. L. Ins. Co. 89 Fed. Rep. 610, 32 C. C. A. 275. Rents may be applied on taxes where there is a deficiency. Elliott V. Magnus, 74 111. App. 436. A receiver will not be allowed for rents paid by him which the pur- chaser should have paid. French v. Pittsburgh Vehicle & Harness Co. 184 Pa. 161. The receiver of rents in an action to foreclose a junior mortgage should not be allowed to pay the rents to the plaintiff until it appears that there is a deficiency upon the sale of the premises. Harris v. Taylor, 22 App. Div. 109. Page 601, sec. 370. — Practice and pleading. The proper remedy by a party claiming to have a paramount inter- est as a cestui que trust in a fund re- covered by a receiver of a corporation, 150 in case he disputes the propriety of a deduction for services made by the receiver's attorney before turning over the fund to the receiver, is an PRACTICE AND PLEADING. § 373 application to the court for an order on the receiver to sue the attorney for the money withheld by him, and not a petition to compel the receiver to account for the amount improper- ly withheld by the attorney, — in the absence of collusion between the re- ceiver and attorney. Johnson v. Johnson Railroad Signal Co. 57 N. J. Eq. 79. Claims for amounts received by a court receiver in chancery causes should, in an action against the es- tate of such receiver and the sureties on his bond, be preferred in the names of those beneficially entitled to the fundj or the parties may go into the several chancery causes and have the accounts settled and a re- ceiver appointed to collect the bal- ance ascertained to be due, notwith- standing a great lapse of time; and they should not be audited simply in the name of the causes in which he was appointed receiver. Williams v. Newman, 93 Va. 719. Page 603, sec. 373. — Parties; allegations. In an action by a receiver to set aside an assignment of a chose in action by a judgi/ient debtor the lat- ter is a necessajy party. Miller v. Hall, 70 N. Y. 250. The first mortgagee is a proper party where a recgiver is prayed for. Miltenberger v. Logansport R. Co. 106 U. S. 286, 27 L. ed. 117. The receiver of an insolvent rail- road company in possession of its assets and exercising its franchises is a necessary party in a proceeding by the state to restrain the further exercise of its franchises. Re George Mathers' Sons' Co. 52 N. J. Eq. 607. In a suit against the fraudulent associates of a corporation the re- ceiver of the corporation is not a necessary party. Wheeler v. Clinton Canal Bank, Harr. Ch. (Mich.) 449. A receiver appointed to take charge of mortgaged property in a proceeding between parties is not a necessary party in a proceeding to foreclose a mortgage on the same property, subsequently commenced. Heffron v. Gage, 149 111. 182. The receiver of a railroad company is not a necessary party to an action against the company on a note ex- ecuted by it. Dullnig v. Weekes, 16 Tex. Civ. App. 1. An insolvent corporation is not a necessary party to an action by the temporary receiver thereof to recover money collected under a judgment confessed by the corporation for the purpose of giving the judgment cred- itor an unlawful preference, \ealis v. American Tube d- Iron Co. 150 N. Y. 42. The receiver of a bank is a neces- sary party in a proceeding in error to reverse a judgment in favor of the bank against an interpleader seeking to recover property from the receiv- er. Mosler v. State Bank, 6 Kan. App. 172. A person not a party, claiming property in the hands of a receiver, must intervene in the suit in which the receiver is appointed. Potter v. Spa Spring Brick Co. 47 N. J. Eq. 442. The receiver is a proper party in an action for an injury from an as- sault by an agent of such receiver while acting for himself and the re- ceiver. Casey v. Oakes, 17 Wash. 409, Reversing on Rehearing 15 Wash. 450. And as such he is entitled to all the constitutional rights guaranteed to any other party. Hamm v. J. Stone & Sons Live Stock Co. 13 Tex. Civ. App. 414. But a receiver against whom judg- ment has been taken is not a neces- sary party to an action on the re- ceiver's bond. Black v. Gentery, 119 N. C. 502. And the receivers of a railroad company are not necessary parties to a suit brought against it after the receivership is virtually closed and the property has been restored to the company and is operated by it. San Antonio & A. P. R. Co. v. Barnctt (Tex. Civ. App.) 44 S. W. 20. A certain averment in a suit on a receiver's bond held siillicient. Ucx V. Lifhrcll, 1 Dru. & W. 2(i. Where suit is by the receiver in bo- 151 §382 EECEIVERSHIPS— SUPPLEMENT. half of creditors the pleadings must set forth facts entitling each credi- tor to maintain the action. Fouche V. Brower, 74 Ga. 251, 204. A receiver's petition in an action by a receiver must set out facts showing his appointment, and by what jurisdiction he was appointed, and so much of the proceedings as to show that his appointment was legal. Rhorer v. Middleshoro Town & Lands Co. 19 Ivy. L. Rep. 1788. It is not necessary to allege that the debtor has no other property, where it is alleged that he is in fail- ing circumstances and has more judgments against him than he can pay. Whitehouse v. Point Defiance, T. & E. R. Co. 9 Wash. 558. An action by a receiver against directors, where it does not appear that they were severally liable, and which is not for accounting, will be regarded as an action at law, and may be demurrable for misjoinder. O'Brien v. Fitzgerald, 143 N. Y. 377. In an action by a receiver^ aver- ments that on a certain date by or- der of court in a certain suit against his insolvent he was appointed re- ceiver of the insolvent's property, with the right to take possession of, sue for, and demand the same, are sufficient. Daggett v. Gray (Cal.) 40 Pac. 959. The prayers of a petition for the granting of an injunction and the appointment of a receiver are prop- erly denied where the allegations of the petition do not make out a case either for an injunction or for a re- ceiver. Short V. Melton, 103 Ga. 567. When, upon decree pro eonfesso in foreclosure, the plaintiff asks for a receiver, he must show by affidavit the amount due for princiipal, inter- est, and costs, a statement in the bill is insufficient. Rogers v. Newton, 2 Ir. Eq. Rep. 40. A denial that a receiver was prop- erly appointed is not sufficient; facts must be stated. Goodhue v. Daniels, 54 lowa^ 19. Verification. Where the petition and answer are not verified in positive terms, and there is no evidence offered, the court should refuse an appointment. New South Bldg. & L. Asso. v. Willing- ham, 93 Ga. 218. Page 607, sec. 382. — Scope of order. Practice under N. Y. Code, § 298, requiring an order of appointment to be filed and recorded, and also cer- tified copy, etc., — considered and de- termined. Fredericks v. Niver, 28 Hun, 417; Scroggs v. Palmer, 66 Barb. 505. Other property belonging to de- fendant against whom a judgment has been rendered requiring him to discharge a specified indebtedness within a given time, and that in de- fault thereof specified land shall be sold and the proceeds applied in pay- ment of the indebtedness, cannot be included in an order appointing a receiver on an application made aft- er the rendition of the judgment. Kr cling v. Kr cling, 118 Cal. 421. An order allowing an ex parte in- junction in attachment proceedings without the filing of the bond re- quired by 2 How. (Mich.) Stat. § 153 0687, and an order appointing a re- ceiver of the property, are void. Lawton v. Richardson, 115 Mich. 12. A substitution of receivers of an insolvent bank cannot be eflFected under the guise of a resettlement of an order which properly expressed the decision of the court as made .at the time it was granted. People v. Murray Hill Bank, 10 App. Div. 328. Parties cannot stipulate away the order of appointment. It is beyond their control. People v. Globe Mut. L. Ins. Co. 57 How. Pr. 482. An order appointing a receiver may be admitted as testimony, but may be defeated by the instructions of the court as to its object. A re- ceiver appointed by a master in chancery may defend his action in suit for trespass. Brush v. Blanch- ard, 19 111. 31. When the complaint does not al- PRACTICE AND PLEADING. §§ 384, 396, 399 lege the facts constituting the neces- sity for the immediate appointment, an order appointing a receiver with- out notice is erroneous. Bank of Florence v. United States 8av. & L. Co. 104 Ala. 297. The order should embrace a find- ing as to facts justifying appoint- ment. Morey v. Grant, 48 Mich. 326. Page 607, sec. 384.— Affidavits. Affidavits may accompany the pe- tition in an action by partners, which ask for the appointment of a receiver, under Tex. Rev. Stat. 1895, art. 1465, and may be read in sup- port of its allegations, but they can- not serve as pleadings in the case or enlarge upon the case made by the petition. We66 v. Allen, 15 Tex. Civ. App. 605. Al>atement. The appointment of a receiver in one action for a fund to be collected by a city from drainage assessments does not abate other actions then pending against the city to compel payment of claims to which the money in such funds is applicable. Wilder v. 'New Orleans, 58 U. S. App. 109, 87 Fed. Eep. 843, 31 C. C. A. 249. Appeal. An insurance company which ap- pears on the rule to show cause why the receiver should not be appointed to collect certain policies, and makes no objection to the appointment, can- not claim on appeal that such ap- pointment was error. New York L. Ins. Co. V. Davis, 94 Va. 427. Suit in tar. A judgment in favor of receivers of a bank in one state is a bar to a suit by the receivers in the name of the bank on the same cause of action in another state. Bank of North America v. Wheeler, 28 Conn. 433, 73 Am. Dec. 683. Attacking judgment. An intervention by a debtor in a judgment in favor of a receiver, in an application by the attorney of the receiver to have the attorney's fees fixed and allowed, whereby such debt- or seeks to reduce the judgment by one half of the attorney's fees in- cluded therein, which the attorney had agreed to allow the receiver to retain, is a direct proceeding within the rule that a judgment may be as- sailed in a direct proceeding for fraud or accident preventing the party from availing himself of a valid defense where the court is the same which rendered the judgment, and has jurisdiction of all the par- ties interested, and control of the funds. Hammond v. Atlee, 15 Tex. Civ. App. 267. Page 615, sec. 396. — Void appointment. An erroneous appointment does not render the consequent proceed- ings void. Mcllhenny v. Binz, 80 Tex. 1. An order directing a receiver to sell property of a corporation is nec- essarily erroneous whore he was im- properly appointed receiver. Em- pire Hotel Co. v. Main, 98 Ga. 176. The appointment of a receiver un- der a judgment which was dis- charged in bankruptcy is void. Gib- son v. Gorman, 44 N. J. L. 325. An insolvent estate is not liable for money loaned by one acting as its receiver under a void appoint- ment. Ludington v. Thompson, 4 App. Div. 117. Page 618, sec. 399.— Right of set-off. The debts of a bank in the hands of a receiver cannot be deducted from its credits in the hands of a receiver, in fixing the amount of an assess- ment against the receiver under the Washington revenue act. Hewitt v. Traders' Bank, 18 Wash. 32(). A counterclaim or set-ofT comes 153 § 399 RECEIVERSHIPS— SUPPLEMENT. within the spirit of the act of Con- gress of August 13, 1888, allowing a receiver of a Federal court to be sued in a state court without leave of the court appointing him. Grant v. Buckncr, 172 U. S. 232, 43 L. ed. 430. A claim for breach of covenants of warranty may be set off by the vendee against the receiver of the vendor, in a suit for rent due by the vendee to the vendor, where the re- ceiver is merely a general one to col- lect and preserve assets. Central Appalachian Co. v. Buchanan, 90 Fed. Rep. 454, 33 C. C. A. 598. A depositor in an insolvent bank is entitled to an equitable set-off of his deposit against a note on which he is primarily liable, although the note is not due at the time of the appointment of the receiver of the bank, where he elects to waive the additional time. Clute v. Warner, 8 App. Div. 40. Where receivers are representa- tives of the creditors of an insolvent corporation, and the suit is against the stockholders, the right of set-off does not exist. Osgood v. Ogden, 4 Keyes, 70. A receiver is entitled to deduct from money due to a creditor any sum paid to him by mistake. Peo- ple V. E. Remington d Sons, 60 Hun, 42. Indebtedness due from an em- 154 ployee may be set off against wages due from a receiver. Davis v. Stover, 16 Abb. N. S. 225. Rights of set-off are not affected by the appointment of a receiver. Re Middle District Bank, 1 Paige, 585. Rent wrongfully paid to a receiver may be offset against future rents. Gra7it V. Buckner, 172 U. S. 232, 43 L. ed. 430. For equitable set-off against funds in the hands of receivers — seeMerrill V. Cape Ann Granite Co. 161 Mass. 212. Debts of a partner and his firm to a bank cannot be set off by a bank receiver against trust moneys which the partner mixed with his own or the firm's deposit, without the bank's knowledgCj the whole amount remaining until the bank failed. Knight v. Fisher, 58 Fed. Rep. 991 ; Fisher v. Knight, 17 U. S. App. 502, 61 Fed. Rep. 491, 9 C. C. A. 582. Depositors of a bank in the hands of a receiver have a right of set-off' as against the demands of the receiv- er due from them on notes. State v. Brobston, 94 Ga. 95. Demands due a lessee before the ap- pointment cannot be set off against rents accruing afterwards. Farmers* Loan d T. Co. v. Northern P. R. Co. 58 Fed. Rep. 257. LAW LIBRARY UWVERSITY OF CAUFOKNU LOS ANGELES up SOUTHERN REGIONAL LIBRARY FACILITY AA 000 851475 4