That, as a matter of fact, when the stock was contributed the company was insolvent, and could not carry on its business without making the said loan; that said stock was worthless and was sold to the company at fifty cents on the dollar for the purpose above mentioned, and thereafter said stock was transferred to the purchasers of the bonds. Then follow allegations as to the mismanagement of the company, and the wrongful payment of dividends, and the averment that on or about September 12, 1892, one of the creditors of the company was compelled to make an application to the United States Circuit Court of Kentucky, wherein a request was made for the appointment of a receiver of the property and franchises of the company for the purpose of realizing its assets and distributing them among its creditors; that in said proceedings all of the property of the Great Western Mining and Manufacturing Company was sold and was found to be of the value of $75,666.66, which left a large floating indebtedness of about $90,000, besides a large balance due upon the bonded indebtedness, aggregating about $270,000; that, in said proceedings in the United States Court for the District of Kentucky, L. P. Black was appointed receiver of the assets of the company, for the purpose of realizing upon the same for the benefit of its creditors, and it is averred that by special order of the United States Court said receiver had been directed to prosecute this suit, either in his own name or that of the company, as may be proper. The prayer of the bill is for an accounting respecting the matters and things set up in the bill, and that the defendant be required to pay to the complainant the sums which may be found to be due by reason of the matters and things set forth, and for general relief. An answer and replication were filed, and the issues made up were heard upon the pleadings and testimony. The Circuit Court found the estate of B. D. Harris, he having died pending the suit, liable in the sum of $15,000, being the amount Harris received from the company in exchange for the 300 shares of stock issued to him in April, 1889, and held that the estate was

not liable on account of the amounts received by him for stock previously issued to him, and was not liable to account for the amounts taken by other officers, directors or stockholders of the company. The case in the Circuit Court is reported in 111 Fed. Rep. 38. Upon cross appeals the Circuit Court of Appeals for the Second Circuit reversed the judgment of the court below upon the ground that the Circuit Court had no jurisdiction of the action, as the same could not be brought by the receiver in the name of the corporation, and if it could be maintained by the corporation, or in its behalf, no case was made for a recovery, because of the consent of the stockholders to the transactions complained of. 128 Fed. Rep. 321. The order appointing the receiver in the Circuit Court is found in the record, and is as follows:

"The above cause coming on this day to be heard upon the motion of complainant for appointment of a receiver and having been fully heard and considered, it is ordered by the court that said motion be granted, and that the order herein before entered, appointing L. C. Black as temporary receiver, be continued, and said L. C. Black be and he is hereby appointed receiver of all the property, rights in action, choses in action, and all assets of every description, of the defendant, The Great Western Mining and Manufacturing Co., with all the powers and authority conferred by the order appointing him temporary receiver herein; and that he is to act and continue to act under the orders hereinbefore made, and that he hold and keep the property and assets arising from the funds of said. business, or that may come into his hands, subject to such order as may be made from time to time; and it is also ordered that he shall have power to purchase such current supplies as are or may be needed in the proper conduct and operation of the business of said company."

The application for the order to bring this action sets forth: "The receiver represents that he has ascertained from the books and records of the Great Western Mining and Manufacturing Company, in his possession, that, in connection with

the floating of the loan of $300,000 in the year 1889, upon the property of the Great Western Mining and Manufacturing Company, situate in Lawrence County, Kentucky, certain stockholders and officers of said company combined to obtain for themselves, and did so obtain, proceeds resulting from the sale of said bonds in the sum of $75,000, which money belonged to and should have been paid into the treasury of said company.

"Your receiver says that he finds shares of capital stock of the Great Western Mining and Manufacturing Company were issued at the instance of and through the action of certain of said stockholders and officers of said company, to the amount of $150,000, which said stock was distributed among said stockholders and officers; that as your receiver is informed and believes there was no consideration for the issue and distribution of said stock; that the said stock was sold by said stockholders, so as aforesaid receiving it, to the defendant, The Great Western Mining and Manufacturing Company, and by means of said sale moneys to the amount of $75,000 were abstracted from the treasury of said company; that the issue and distribution of said capital stock was, as your receiver believes, a mere device or instrumentality to abstract said moneys from the treasury of said company; that said company as your receiver believes, has a valid claim against said persons to recover said moneys; that some of said parties are solvent and able to repay said monies, and proceedings should be taken to recover it for said company and its creditors.

"Your receiver further says that he has discovered from the books of the company that apparently, by reason of the inattention and negligence of the board of directors of the said Great Western Mining and Manufacturing Company, and apparently by reason of the mismanagement and misappropriation of the funds of the company, by certain members of said board, that the said company has been greatly damaged, and its assets depreciated in value in a large amount, the exact sum of which is unknown to your receiver, and that said losses

Argument for Petitioner.

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should now be made part of the said company's assets, and that the same is, in the opinion of your receiver, a valid claim against the said board of directors, and that proceedings should be taken to recover the same for the said company and its creditors.

"Wherefore your receiver prays the direction of your honorable court as to his duty in the premises.'

Upon this application the court made the following order: "This cause coming on to be heard upon the application of L. C. Black, receiver herein, asking for instructions as to his duty in the matters and things set forth in the said application, and wherein said receiver represents to the court that in certain transactions connected with the floating of a loan of $300,000 upon the property of the Great Western Mining and Manufacturing Company, apparently $75,000 was withdrawn by certain stockholders and officers of the said company, whereas the same should have been paid into the treasury of the said company; and wherein said receiver further represents that apparently certain stock was issued to the stockholders and officers of the said company without consideration, and that apparently by reason of the inattention and negligence and mismanagement of the board of directors of the said company and the misappropriation of the funds of the said company, said company has been greatly damaged and its assets depreciated.

"And it appearing to the court that it will be for the advantage of the said company that suit shall be instituted against. the stockholders and directors of the same for the recovery of the sums so represented to be lost, it is, therefore, directed that said receiver proceed in his own name as receiver or in the name of the company, as he may be advised, to recover said sums."

Mr. Harlan Cleveland for petitioner as to the right of receiver to maintain the action:

The United States Circuit Court for Vermont had jurisdic

198 U. S.

Argument for Petitioner.

tion of the suit. The cases cited by the Circuit Court of Appeals simply decide that an ordinary receiver in whom no title has vested cannot in his own name maintain a suit in a court of another State to recover assets or enforce double liability.

But the court in collecting the assets of a corporation is acting within its powers on behalf of the corporation, or as the successor of the officers of the corporation in directing suit to be brought by it and in its name.

When the United States Circuit Court for the District of Kentucky appointed a receiver of The Great Western Mining and Manufacturing Company, and by that act assumed charge of the assets and affairs of the corporation, it took the place, and could exercise the powers, of the directors. See authorities so holding as to calls or assessments on stockholders for the unpaid portion of the subscription price of stock. Scoville v. Thayer, 105 U. S. 143, 155; Hawkins v. Glenn, 131 U. S. 319, 329; Glenn v. Marbury, 145 U. S. 499, 510; Gt. W. Tel. Co. v. Purdy, 162 U. S. 329, 336; Hayward v. Leeson, 176 Massachusetts, 310; Kentucky Codes, § 302.

The practice is entirely familiar to courts of chancery.

In Taylor v. Allen, 2 Atk. 213, a receiver to collect the assets of a testator was empowered to sue in the name of the executrix. Pitt v. Snowden, 3 Atk. 750; Yeager v. Wallace, 44 Pa. St. 291; Merritt v. Merritt, 16 Wend. 405; Freeman v. Winchester, 10 S. & M. (Miss.) 577; Green v. Winter, 1 Johns. Ch. 60.

Even if the suit be treated as one brought by the receiver in his own name, it is maintainable on the principle of comity. In Kentucky a receiver can bring an action in his own name. Codes, § 21.

The receiver could undoubtedly have maintained this suit in Kentucky in his own name. Kentucky allows foreign receivers to sue in that State by comity when there are no domestic creditors requiring protection or no infringement of the public policy of that State or no injustice would be done thereby to the citizens within its jurisdiction. Rogers v. Riley, (Ky.) 80 Fed. Rep. 759; Zacher v. Fidelity Trust Co., 106 Fed.