CHAPTER XXVII.

OF THE RECEIVER'S FUNCTION,

AND HEREIN OF HIS RIGHTS, DUTIES, AND LIABILITIES.

§ 725. Introduction.

I.

The receiver holds the property for the benefit of all parties until after the decree.

§ 726.

§ 727.

Of the receiver's title.

§ 723.

§ 73).

Of interference with the receiver's possession-(a). In general. (b). By violence or threats-"Strikes."

§ 732.

The same subject, continued-Leave to sue a receiver in another

court.

§ 733. The same subject, continued-When leave to sue not necessary.

§ 736.

The same subject, continued-General leave to sue may be given in the order of appointment.

§ 737. Of his right to sue in another court-Comity.

§ 738.

Of his power and liability as to contracts made before appointment.

§ 739. The same subject, continued-Stale claims.

The same subject, continued-Of specific performance and rescission of contracts.

§ 740.

§ 741.

Of the right and duty to collect subscriptions to stock.

§ 743.

The same subject, continued-The receiver's discretion in certain

§ 744.

§ 745.

cases.

Of the right to lease other lines.

Of the receiver's right to sell securities pledged to him as indemnity against loss on account of a debt of the railroad.

§ 746. Of the duties of receivers appointed by the courts of the United States under the statute of March 3, 1887.

§ 747. Of the right to employ counsel-Compensation of counsel. Of the receiver's right to compensation for his services.

§ 748.

III.

§ 749. Of the right to borrow money and to issue receiver's certificatesFor what specific purposes certificates may be issued-(a). In general.

$750. (b). For operating expenses, equipment, and repairs.

§ 751.

(c). For the payment of debts due employees, and for material and supplies, incurred prior to the receivership.

§ 753.

The priority of the lien created by the certificates.

§ 754. The order authorizing the issue can be made only upon notice to all parties in interest.

755. The same subject, continued-Express consent of the parties in interest, not essential.

§ 756.

§ 757.

The order authorizing the issue of certificates, strictly construed. An order authorizing an issue of certificates pending an appeal, is subject to review.

§ 758. The non-negotiability of receivers' certificates.

759. The invalidity of certificates issued irregularly, or without consideration.

IV.

§ 760. Of the receiver's liability-(a). In his official capacity.

§ 702 The same subject, continued-Breach of trust.

763. To what court the receiver is amenable.

§ 764. The same subject, continued-Effect of the Removal of Causes and Interstate Commerce Acts.

I.

§ 725. Introduction. The receiver, being an officer of the court, is not to be regarded, in any sense, as the agent or representative of either party to the action.1 It is his duty to exercise his function to the best of his ability in the interest of all parties alike, and it is his privilege to act independently, without control by any one of them.2 The fund or property is to be regarded as in custodia legis, and the receiver as the creature or of

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ficer of the court, having only such powers as are expressly conferred upon him by the order of appointment, or such as are conferred upon him by the established rules and usages of a court of chancery. Beyond such action as is necessary to protect the property, the court will not exercise its power on behalf of the company. It will not order a meeting of stockholders, called for the election of officers, to be postponed on the ground that it was called by mistake and contrary to the by-laws of the corporation.5

1 Matter of Burke, 1 Ball & B. 74; Fairfield v. Weston, 2 Sim. & St. 98; Bryan v. Cormick, 1 Cox, 422; Field v. Jones, 11 Ga. 413; Broad v. Wickham, 1 Smitli's Chan. Prac. 500; Angel v. Smith, 9 Ves. 335; Curtis v. Leavitt, 1 Abb. Pr. 274; S. C. 10 How. Pr. 481; Lottimer v. Lord, 4 Smith E. D. 183; Davis v. Duke of Marlborough, 2 Swanst. 125.

2 Iddings v. Bruen, 4 Sand. Ch. 417.

3 Portman v Mills, 8 Law J. (N. S.) Ch. 161; Delany v. Mansfield, 1 Hogan, 234.

4 Booth v. Clark, 17 How. 322; Green v. Bostwick, 1 Sand. (N. Y.) Ch. 185; Skinner v. Maxwell, C6 N. C. 45; €8 N. C. 400; Battle v. Davis, C6 N. C. 252; Coburn v. Ames, 57 Cal. 301; Hunt v. Wolfe, 2 Daly, 303; Corey v. Long, 43 How. Pr. 497; S. C. 12 Abb. Pr. N. S. 427; Devendorf v. Dickinson, 21 How. Pr. 275; Ellicott v. Warford. 4 Md. 80; Hooper v. Winston, 24 Ill. 353; Kaiser v. Kellar, 21 Iowa, 95; Chautauque Co. Bank v. White, 6 Barb. 59; Verplanck v. Mercantile Insurance Co. 2 Paige, 438, 452; 1 Grant's Chan. Prac. (2nd ed.) 298; Beach on Receivers, § 2.

5 Taylor v. Philadelphia etc. R. R. Co. 7 Fed. Rep. 381.

726. The receiver holds the property for the benefit of all parties until after the decree. Though a receiver may be, and generally is, appointed upon the application of but one of the parties interested in the property which he is to preserve, his holding is not merely for the benefit of that party, or of any other party; it is the holding of the court for the equal benefit of all persons who may be finally adjudged by the court to have rights in it.1 While it may be said, as a general rule, that a receiver is not appointed for the benefit of

strangers to the suit, yet his appointment enures to the benefit not only of the party at whose instance the court exercises the jurisdiction, or of the other parties of record in the event of their success in the action, but also of all parties who may at any stage of the proceeding; establish a right in or to the subject-matter of the suit.3 Thus, where there are conflicting claimants of a trust fun 1, who arc prosecuting separate suits in the same court, the appointment of a receiver in one of the suits, on the motion of the plaintiff in that suit, will enure to the benefit of the plaintiff in the other suit, upon the establishment of his superior right to the fund, and he may have an order in his own suit for the settlement of the receiver's accounts, and a decree against him for the amount found to be in his hands. When the rights of the parties have been established, he is considered as holding for the benefit of the parties entitled to the property. Upon a decree for the plaintiff, the receiver's duties, as such, are at an end, and he holds merely as his trustee. To entitle the plaintiff to the property, he should make a demand with a certified copy of the decree with his receipt on it.o

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1 First Nat. Bank v. Barnum Wire & Iron Works, 60 Mich. 487; S. C. 53 Mich. 315 (1885); Delaney v. Mansfield, 1 Hogan, 234

2 Howell v. Ripley, 10 Paige, 43.

3 Delaney v. Mansfield, 1 Hogan, 234; Skip v. Harwood, 3 Atk. 564; In re Colvin, 3 Md. Ch. 278; Ilicctt v. Warrord, 4 Md. &0; lddings v. Bruen 4 Sand. Ch. 417; Leach on Rceivers, § 4.

4 Beverley v. Brooke, 4 Gratt. 187.

5 In re Colvin, 3 Md. Ch. 278.

6 Very v. Watkins, 23 How. 469; Beach on Receivers, § 252.

727. Of the receiver's title.-The receiver must, in general, be held to have title, otherwise

he will not be able to execute his trust, which may necessitate a transfer and a revesting of the original title. The possession of the receiver is that of the court of which he is the ministerial officer. Thus it is that, inasmuch as the receiver is merely an officer of the court appointing him, property in his possession is said to be in the custody of the law.1 His possession, as an officer of the court of chancery, has been likened to that of the sheriff as an officer of a court of law, when he has taken possession of property under an execution or attachment. And it is said to be immaterial in this respect that the receiver appointed declines to act, the property being notwithstanding in the custody of the law. His possession is not technically adverse to that of either party to the litigation.*

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1 De Visser v. Blackstone, 6 Blatchf. 235; Robinson v. Atlantic & Great Western R'y Co. 66 Pa. St. 160; Angel v. Smith, 9 Ves. 335; Ohio etc. R. R. Cɔ. v. Fitch, 20 Ind. 498; Ellicott v. Warford, 4 Md. 80; Albany City Bank v. Schermerhorn, 9 Paige, 372. Cf. Covell v. Heyman, 111 U. S. 176,

2 In re Merchants' Insurance Co. 3 Biss. 165, per BLODGETT, J. 3 Skinner v. Maxwell, 68 N. C. 400; Beach on Receivers, § 221.

4 Ellicott v. Warford, 4 Md. 80; Mays v. Rose, Freeman (Miss.), 703; Angell v. Smith, 9 Ves. 335. Cf. Lee v. Cone, 4 Coldw. 3.2.

728. Of the receiver's possession.-The power of a receiver to "take" property implies a correlative duty on the part of any one having it in possession to deliver it to him, and such holder violates the law in resisting the exercise of the lawful authority of the receiver. In such case the receiver may call upon the sheriff and his deputies to aid in enforcing his authority. A mortgagee has no equitable right growing out of his mortgage lien to have a receiver of the estate of the mortgagor beyond the property embraced in the mortgage; nei.