Being an officer of the court, he cannot sue or be sued, unless leave for such action is first obtained from the court.

The effect of the appointment of a receiver is to take the possession of the property out of the hands of the parties to the suit; but their right or title to the property is in no way affected by such appointment; his duty is to manage and to preserve the property under the control and with the advice of the court.

Receivers are frequently appointed when the legal holders are incapacitated from taking care of the property, e. g., infants and lunatics, when rights of other parties might be endangered; in cases where disputes arise between buyer and seller, and most generally in cases of insolvent firms and corporations.

When an application is filed for the appointment of a receiver, such application shall contain a statement of the reasons which induce the applicants to apply for such action, and these shall be annexed thereto.

Ist. A full, just and true inventory of all the estate, both real and personal, in law and equity, of the corporation, and of all the books, vouchers and securities relating thereto.

2d. A full, just and true account of the Capital Stock, if any, of the corporation, specifying the names of the stockholders, their residence, the number of shares belonging to each, the amount paid in upon such shares respectively, and the amount still due thereon.

3rd. A statement of all the incumbrances on the property of the corporation, and of all engagements entered into by it, which have not been fully satisfied or cancelled, specifying the place of residence of each creditor, and of every person to whom such engagements were made, the sum owing to each creditor, the nature of each debt or demand, and the true cause and consideration of such indebtedness.

To every such petition there shall also be annexed an affadivit of the applicants, that the facts stated in the application, and the accounts, inventories, and statements contained therein or annexed thereto, are just and true, so far as they know, or have the means of knowing.

Upon such petition, accounts, inventories, and affidavits being filed, an order is entered requiring all persons interested in the corporation to show cause, if they have any, why the appointment should not be made. If it appear to the court that the corporation is insolvent, or that a dissolution thereof will be beneficial to the stockholders, and not injurious to the public interest, or that the objects of the corporation have wholly failed, etc., a judgment shall be entered dissolving the

corporation, and appointing one or more receivers, of its estate and effects, for the purpose of winding up its affairs, or to operate its business until settlement of its financial difficulties.

A director, trustee, or other officer of the corporation or any of its stockholders, may be appointed a receiver. Such receiver shall be vested with all the estate, real and personal, of the corporation, from the time of filing his bond. He shall be trustee of such estate for the benefit of the creditors and stockholders.

If there be any sum, remaining due upon any share of stock subscribed in the corporation, the receiver shall immediately proceed and recover the same, unless the person so indebted is wholly insolvent, and for that purpose may commence and prosecute an action for the recovery of such sum, without the consent of any creditor of the corporation.

As soon as a receiver has been appointed and his bond filed, he should give notice thereof by publication.

After the first publication of the notice of the appointment of a receiver, every person having possession of any property belonging to the corporation, and every person indebted thereto, must account and answer to the receiver for the amount of such debt, and for the value of such property.

The receiver shall call a general meeting of the creditors of the corporation, within four months from the time of his appointment, at which all accounts and demands for and against the corporation, and all its open and subsisting contracts, shall be ascertained and adjusted.

The receiver may, from time to time, make dividends of the money in his hands, among the creditors of the corporation, until they are paid in full; provided, however, he may have the funds; but no dividend shall be made to the stockholders until after the final dividend to creditors.

The receiver shall be subject to the direction and control of the court as to the time of making dividends, both to the creditors and stockholders of the company, and as to the time of winding up the corporation, and rendering his final accounts.

When required by the court, a receiver shall render a full and accurate account of all his proceedings to the court, on oath. In some states this account is referred to a referee or master commissioner for examination.

Before such account is rendered the receiver shall give notice by publication, specifying the time and place at which such account wi'l be rendered.

The referee to whom such account is referred, shall hear and examine the proofs, vouchers and documents offered for or against the same, and shall report thereon fully to the court; and when the report is made, the court shall hear all concerned therein, and shall allow or disallow the account, and may decree the same to be final and conclusive upon all the creditors of the corporation, upon all persons who have claims against it, and upon all the stockholders of the corporation. It has been shown, that, with an application for the appointment of a receiver, a complete inventory of the corporation's effects must be filed, therefore when the receiver enters upon his administration, his first duty should be to make the books conform with the inventory, which should be kept stricty upon the principles of double entry.

When the books for a receivership have been properly opened and conducted, it will be found an easy matter to render a partial or final account therefrom.

Every important act of a receiver should be by and with the consent of the court. He should have all his orders in writing, also see that they have been entered upon the Court Journal.

It is not the purpose of these instructions to illustrate a system of accounting. The system to be adopted, depends upon the one in use, and the nature and extent of the business.

The ordinary principles of double entry are applicable to this as well as to any other branch of business, and if the instructions herein given should lead to further study on the subject, from the statutes of your own state, the purpose sought will have been accomplished.

CHAPTER TWENTY-NINE.

Building Association Accounting.

The plans and methods used in the management of Building and Loan Associations are numerous, and any attempt at the formation of a system of accounting undertaking to provide for all varying requirements, must fall short of success. The working of these institutions offers a broad field to the student of economics, and to the practical

accountant.

Building Associations, since their introduction into the United States nearly sixty years ago, have appeared in several distinct forms, with so many modifications that an attempt to refer to all of them would be confusing, therefore, we will treat only those known to be the best.

Building or Savings and Loan Associations are corporations, and are now recognized generally as an important factor in the social economy of the country.

Shares of Stock.

Every member of an association is a stockholder, becoming such by subscribing for a certain number of shares. This subscription binds him legally to pay into the common fund, in regular installments, the amount represented by all of the shares for which he subscribed. The number of shares one member may hold is usually fixed by the constitution, or by-laws, and in some states the number is fixed by law.

In some instances the number of shares that may be held is not fixed, but only a specified number may be voted. This is done for the purpose of preventing a few heavy shareholders from obtaining and holding control of the association.

A stockholder in a building association pays only one dollar when he buys a share of stock, (except under certain circumstances) thereafter one dollar per month or week called Dues is paid, until the small sums thus paid, increased by the dividends to which he is

entitled, equals par value of his shares. When the par value is reached, the stock has matured, and the stockholder surrenders his shares to the association, and receives his money. If he has had a loan equal to the value of his stock, the loan is cancelled when it

matures.

Increase of Capital Stock.

The Capital Stock of an association is fixed originally in the articles of incorporation, the same as other corporations, but in most states associations have authority by their charters to increase their capital stock within the statutory limits and requirements.

The stock should be increased only when all the shares have been taken by bona fide subscriptions, because the increase involves additional expenses. It is impossible to lay down uniform rules for increasing the capital. All depends upon the nature of the association, the rules adopted by it, and the statutory requirements under which it is operated. Associations increasing their stock should do so only under competent legal advice, and in strict accordance with law.

A provision in the charter of a terminating association for increasing the capital stock is unnecessary, as the term is generally understood, which will be shown hereafter

Shares are Transferable.

Shares of stock in building associations, like other corporations, are transferable by assignment and delivery, a method of which should be well defined in the constitution or by-laws. A transfer of stock cannot be made, if it should in any way interfere with the corporate rights of the association. If there are any arrears upon stock, it cannot be transferred until all arrears are paid, but when there are no arrears, and the holder of the stock has complied with all requirements the association is obliged to make transfers. When transfers are made, a transfer fee is charged to the person to whom the transfer is made. This is an equivalent to the admission fee charged to new members.

Payment of Dues or Stock.

As stated above, payments on stock are made in small amounts weekly or monthly, called Dues, and when the stock is paid-up, it has reached its par, or expected value. There is a vast difference between