1 Van Rensselaer v. Emery, 9 How. Pr. 135; Vermont etc. R. R. Co. v. Vt. etc. R. R. Co. 46 Vt. 7.2; Ross r. Williams, 11 Icisk. 410; Battle v. Davis, 66 No. Car. 252; Ellicott v. Warford, 4 Md. 80. 2 Beverly v. Brooke, 4 Gratt. 187; Libby v. Rosekrans, 55 Barb. 202; Delany v. Mansfield, 1 Hogan, 234; Albany City Bank v. Schermerhorn, 9 Paige, 372. 3 Parker v. Browning, 8 Paige, 388; Newell r. Smith, 49 Vt. 255. 4 Clark v. Bininger, 11 Jones & S. 126, 344; Matter of Woven Tape Skirt Co. 12 Hun, 111; Vermont etc. R. R. Co. v. Vt. etc. R. R. Co. 46 Vt. 792. 5 Bell v. Shibley, 33 Barb. 6!0; New Orleans Gas Light Co. v. Ben. nett, 6 La. An. 457. 6 Gillet v. Moody, 3 N. Y. 479; and see Atchison v. Davidson, 2 Pinn. (Wis.) 48; Lafayette Bank v. Buckingham. 12 Ohio St. 419. 7 Att.-Gen. v. Life Ins. Co. 77 N. Y. 272; and see Van Cott v. Van Brunt, 2 Abb. N. C. 283. 8 Devendorf v. Beardsley, 23 Barb. 656; Hyde r. Lynde, 4 N. Y. 387; and see Moise v. Chapman, 24 Ga. 249; Safford v. People, 85 Ill. 558; Lincoln v. Fitch, 42 Me. 456. 9 Platt v. Beach, 2 Ben. 303. § 175. Rights and duties of receiver.-The general rights and duties of a receiver are derived from the order appointing him, and the course and practice of the court.1 It is his duty to act in all things with a view to the equit able rights of the parties interested, and to protect the property intrusted to him to the best of his ability.2 In case of doubt he should obtain the direction of the court. In equity, the receiver becomes vested with the power to possess himself of the personal property covered by the receivership without the necessity of an assignment;* though it may be otherwise at law. The order of appointment is per se a sequestration, conferring upon the receiver the necessary means of enforcing his rights. But real estate becomes vested in the receiver only by virtue of a conveyance to him. An assignment to a receiver passes the rights and property of the corporation precisely in the same plight and condition, and subject to the same equities, as they were held by the corporation.8 By virtue of their general powers, receivers have authority to sue for all moneys due the corporation, and for all property improp erly disposed of in violation of the rights of either creditors or stockholders, for the purpose of paying the debts and dividing the surplus, if any, among the stockholders." Ma W car The duty of calling in the unpaid stock to discharge debts, devolves upon the receiver. 10 He may be allowed to compromise disputed claims against the company, or to submit them to arbitration.11 But he cannot waive a defense, 12 nor allow a claim against a corporation which could not have been recovered against it, either at law or in equity.1 13 He is the proper person to bring a suit to enforce payment of a debt due the company, 14 and he can sue for torts committed before his appointment.15 And he may maintain an action outside the jurisdiction of the court which appointed him.16 He should make all the assignments and do all lawful acts in his own name, and not in the name or under the seal of the corporation. 17 As it respects the disposition of money in his hands, it is simply his duty to pay nothing out without an order of the court;18 and he should see that every item of expenditure was fully justified by the order.19 The mere possession by receivers of the obligations of the company, will not discharge them.20 Irregularities in the appointment of a receiver cannot be shown to impeach his title to the corporate assets; 21 and they constitute no ground of defense to an action brought by him on a note owned by the corporation.22 1 Verplanck v. Mercantile Ins. Co. 2 Paige, 438; 1 Edw. Ch. 84; Sey. mour v. Wilson, 16 Barb. 294. 2 Iddings v. Bruen, 4 Sand. Ch. 417; Corey v. Long, 12 Abb. Pr. N. 8. 427; Ohio etc. R. R. Co. v. Davis, 23 Ind. 553. 3 Lottimer v. Lord, 4 E. D. Smith, 183. 4. Matter of Eagle Iron Works, 8 Paige, 386; Chautauqua Co. Bank v. Risley, 19 N. Y. 36; and see Bidlock v. Mason, 26 N. J. Eq. 30; Frailey v. Central Fire Ins. Co. 9 Phila. 219; McIlvath v. Sinore, 22 Minn. 391. 5 Mann v. Pentz, 2 Sand. Ch. 257. 6 Rutten v. Tallis, 5 Sand. 610. 7 Walker v. White, 36 Barb. 592; Chautauqua Co. Bank v. Risley, 19 N. Y. 329; and see Simpkins v. Gold Co. 50 How. Pr. 56. 8 Receiver r. Patterson Gas Light Co. 3 Zab. 283. Compare Berry v. Brett, 6 Bosw. 627; Clarke v. Hawkins, 5 R. I. 219; Jones v. Robinson, 26 Barb. 310; Colt v. Brown, 12 Gray, 233. 9 Osgood r. Laytin, 48 Barb. 463. See Osgood v. Laytin, 5 Abb. Pr. N. S. 1; Vail v. Hamilton, 20 Hun, 355. 10 Hightower v. Thornton, 8 Ga. 486; and see Pentz v. Hawley, 1 Barb. Ch. 122. The receiver must show a clear legal right to institute and carry on a suit against a stockholder, to recover an unpaid sub scription: Chandler v. Keith, 42 Iowa, 99. And see Stillman v. Dough. erty, 44 Md. 380. 11 Matter of Croton Ins. Co. 3 Barb. Ch. 642. Authority to compromise demands against individual stockholders on their subscriptions, will not be conferred on a receiver: Chandler v. Brown, 77 Ill. 333. 12 McEvers v. Lawrence, Hoff. Ch. 172. 13 Att.-Gen. v. Insurance Co. 4 Paige, 224; Evans v. Insurance Co. 9 Allen, 329. 14 Gillet v. Fairchild, 4 Denio, 80; Nathan v. Whitlock, 9 Paige, 152; Bank of Niagara r. Johnson, 8 Wend. 645. 15 Brouwer v. Hill, 1 Sand. 629. 16 Hoyt v. Thompson, 5 N. Y. 320. Compare Barclay v. Quicksilver Min. Co. 6 Lans. 25. 17 Hoyt r. Thompson, 5 N. Y. 320. 18 Fletcher v. Dodd, 1 Ves. 85. Compare Att.-Gen. v. Vigor, 11 Ves. 563. 19 Brown v. New York etc. R. R. Co. 19 How. Pr. 84. As to author. ity to sell assets: see Randolph v. Larned, 27 N. J. Eq. 557. 20 Liquidator etc. v. Brown, 21 La. An. 248. 21 Vermont etc. R. R. Co. v. Vt. etc. R. R. Co. 46 Vt. 702; and see Battershall v. Davis, 31 Barb. 323; Russell v. East Ang. Railw. 3 Mach. & G. 125. 22 Case v. Marchand, 23 La. An. 60. § 176 General liabilities of receiver.-In all matters relating to the trust fund, the receiver acts at his peril. He has a right, at any time, to apply to the court for instructions as to his duties under the orders of the court; and he will not be exonerated from any loss that may arise from his neglect and mismanagement. For his indiscretion or abuse of the fund he will be held answerable, and his sureties must respond to any inability on his part, or for his delinquency in paying any unau thorized or unreasonable demands. He has no authority to bring an action of ejectment without leave of the court; and, as a general rule, if he defends actions, or does any other acts which may involve the estate in expense, without first applying to the court for leave, it is at his own risk as to costs. A receiver appointed to operate and manage a railroad, is the agent of the power appointing him,8 and, like all public agents, he is liable only for his own wrongful acts or delinquencies," and not for acts done in the legitimate business of the agency.10 But if the receivers of a railroad are, in fact, common carriers, it is no defense to an action for breach of duty or obligation that they were managing the road as receivers. The attorneys, solicitors, or counsel of the several parties, are bound in duty to their clients to watch the proceedings of the receiver, and to see that he faithfully discharges the duties of his trust. If he abuse the trust, or squander the fund, he may be removed or restrained by the court. 13 And when a company is being wound up voluntarily under the supervision of the court, the liqui dators appointed by the company may be removed by the court in its discretion, if, in view of all the circumstances, their removal is deemed more conducive to the efficient winding up of the company.1 14 1 Devendorf r. Dickenson, 21 How. Pr. 275. 2 Curtis r. Leavitt, 1 Abb. Pr. 274; 10 How. Pr. 481; Matter of Van Allen, 37 Barb. 225. 3 Iddings e. Bruen. 4 Sand. Ch. 417. 4 Matter of Stafford, 11 Barb. 353; Lansing v. Lansing, 1 Abb. Pr. N. S. 280; 45 Barb. 182. 5 Devendorf v. Dickenson, 21 Iow. Pr. 275. 6 Matter of Merritt, 16 Wend. 405; 5 Paige, 125. 7 Anonymous, 6 Ves. 287; Utica Ins. Co. v. Lynch. 2 Barb. Ch. 573. 8 Camp e. Barney, 4 Hun. 373, 377; Kain v. Smith, 11 id. 552; Hopkins r. Connell. 2 Teun. Ch. 323. 9 Hopkins v. Connell, 2 Tenn. Ch. 323. 10 Camp v. Barney, 4 IIun, 373; and see Cardot v. Barney, 63 N. Y. 281. 11 Newell r. Smith, 49 Vt. 255; Paige v. Smith, 99 Mass. 395; Cowdrey r. Galveston etc. R. R. Co. 3 U. S. 352; Re Long Branch etc. R. R. Co. 24 N. J. Eq. 38; Meyer v. Johnston, 53 Ala. 237; Blumenthal v. Brainerd, 38 Vt. 402. 12 Ryckman v. Parkins, 5 Paige, 544; Corey v. Long, 12 Abb. Pr. N. S. 427. 13 Matter of Bowery Bank, 5 Abb. Pr. 415; 16 How. Pr. 56. 14 Re Marseilles Extension Railw. etc. Co. Law R. 4 Eq. 692. Compare Lottimer v. Lord. 4 E. D. Smith 183; Wiswell r. Starr, 50 Me. 381; Morris v. Thomas, 17 Ill. 112; State v. Claypool, 13 Ohio St. 14. CHAPTER XIV. MORTGAGES OF CORPORATE PROPERTY. § 177. Power to make. § 178. What property included in mortgage. § 179. Mortgage of corporate franchises. § 180. Mortgage of future acquisitions. § 181. Form, execution, etc., of mortgage. § 182. Power of a corporation to take a mortgage. $ 184. Enforcement of mortgage. § 177. Power to make.-In order to carry out the corporate objects, a corporation may borrow money,1 and may execute a mortgage upon the corporate property, real and personal, to secure the payment.2 So, a power to purchase lands necessary and convenient for the prosecution of the works of a corporation, and to dispose of the same, implies a power to mortgage them to secure the debts of the company.4 And a power to mortgage for a particular purpose, conferred by a special provision in the charter, does not abridge the general power to exe. cute a mortgage for the security of creditors.5 A mort gage to secure demands for materials and labor in erect ing a building, is valid under a power to mortgage land of the society for the purpose of building thereon. The defect of lack of power to mortgage the corporate property may be cured by subsequent recognition and ratification on the part of the legislature. But the legislature has no power to confirm the fraudulent sale of the mortgaged property of a corporation; or to enact a law impairing the obligation of the contract between the mortgagors and the mortgagees.? A mortgage given by a corporation to secure bona fide holders of its bonds, will be sustained, although the resolution authorizing its execution was 178 |