solvent and has not given bonds, or is guilty of misconduct; or where two trustees or executors disagree so that it is impossible for them to act together; 14 and at the suit of remainder-men, where the holder of the particular estate is guilty of voluntary or permissive waste,15 or improperly refuses to renew leaseholds.16 In the case of trustees, the court will thus interfere whether the trust is express or implied." A receiver may be appointed over the property of an infant,18 when the latter has no guardian, or his guardian is insolvent or has been guilty of misconduct,19 and has no parents, or his parents are unfit to be intrusted with the care of his estate.20 Receivers may be appointed over the property of idiots and lunatics, when no person can be found disposed to act as committee; 21 or, it seems, when the committee is infirm, or the management of the estate is very onerous, or the committee lives far from the estate. The statutes of the several States authorize the appointment of receivers in numerous cases, especially in providing for the dissolution of corporations. In so far as State statutes authorize the appointment of receivers, they will be followed by the Federal courts, provided at least that they do not deprive a party of a trial by jury to which he would have been entitled at common law; and the Federal courts will also observe the statutory conditions required for such appointments, but not the State practice. State statutes forbidding the appointment of receivers or the taking of possession by a mortgagee in certain cases will not be followed by the Federal courts.

14 Ball v. Tompkins, 41 Fed. R. 486. 15 Vose v. Reed, 1 Woods, 647, 650. 16 Bennett v. Colley, 2 M. & K. 225; S. C., 5 Sim. 181, 192; Lord Montford v. Lord Cadogan, 17 Ves. 495.

17 Pritchard v. Fleetwood, 1 Meriv. 54; Daniell's Ch. Pr. (5th Am. ed.) 1724.

18 Hicks v. Hicks, 3 Atk. 277; Union Tr. Co. v. Ill. M. R. Co., 117 U. S. 434; Sage v. M. & L. R. Co., 125 U. S. 361; Kerr on Receivers (2d Am. ed.), 16-18. 19 Pitcher v. Helliar, Dick. 580; High on Receivers, § 725-732.

20 Butler v. Freeman, Amb. 301; Kiffin v. Kiffin, cited in 1 P. Wms. 795; Kerr on Receivers (2d Am. ed.), 16-18.

The

21 Ex parte Warren, 10 Ves. 622; Anon., 1 Atk. 578; Ex parte Radcliffe, J. & W. 639; Kerr on Receivers (2d Am. ed.), 113, 114.

22 Kerr on Receivers (2d Am. ed.), 113, 114, citing Re Birch, Shelf. on Lun. 146; Re Seaman, Shelf. on Lun. 146.

23 Bates v. International Co. of Mexico, 84 Fed. R. 518; Flash v. Wil kerson, 22 Fed. R. 689; Fechheimer v. Baum, 37 Fed. R. 167; Tomlinson & W. Mfg. Co. v. Shatto, 34 Fed. R. 380; Davis v. Gray, 16 Wall. 203, 219, 220; supra, § 7.

24 American Nat. Bank v. Northwestern M. L. Co., 89 Fed. R. 610; supra, § 6.

statutes of the United States authorize the appointment of a receiver of a national bank by the Comptroller of the Currency in certain specified cases.25 Until the Comptroller has acted, a court of the United States may appoint a receiver of the assets of such a corporation.26 After the appointment by the Comptroller of such a receiver, it is doubtful whether a court of the United States would appoint another; and after the appointment of a receiver by a court of competent jurisdiction, it is doubtful whether the Comptroller of the Currency could thus interfere.27

28

Independently of statutory authority, a court of equity will ordinarily appoint a receiver of the property of a corporation in only eight classes of cases: firstly, at the suit of mortgagees or other holders of liens upon it; 29 secondly, at the suit of judgment creditors seeking equitable assets after executions have been returned unsatisfied, and the return shows that there is no corporate property upon which a levy can be made; 30 thirdly, at the suit of persons interested in the property, whether as stockholders 31 or creditors, even creditors without judgments or liens," where there is a breach of duty by the directors, and

25 U. S. R. S., SS 5141, 5191, 5195, 5201, 5205, 5234, 5235, 5236; Laws of 1876, ch. 156 (19 St. at L., p. 63); 1st Supp. U. S. R. S., p. 216; supra, § 15; infra, SS 240, 330.

26 Wright v. Merchants' Nat. Bank, 1 Flippin, 568; Irons v. Mfrs. Nat. Bank, 6 Biss. 301.

27 Harvey v. Lord, 10 Fed. R. 236. 28 Milwaukee & M. R. Co. v. Soutter, 2 Wall. 510; Mercantile Tr. Co. v. Missouri, K. & T. Ry. Co., 36 Fed. R. 221. But see Trust & D. Co. of Onondaga v. Spartanburg Water Works, 91 Fed. R. 324.

31 Evans v. Coventry, 5 De G., M. & G. 911; Powers v. Blue Grass B. & L. Ass'n, 86 Fed. R. 705. But see Edwards v. Bay State Gas Co., 91 Fed. R. 942; Hunt v. American Grocery Co., 80 Fed. R. 70; Becker v. Hoke, 80 Fed. R. 973; Texas C. C. & Mfg. Ass'n v. Storrow, 92 Fed. R. 5; Ranger v. Champion C. P. Co., 52 Fed. R. 609.

32 Sage v. Memphis & L. R. R. Co., 125 U. S. 361; Consolidated T. L. Co. v. Kansas C. V. Co., 43 Fed. R. 204; Doe v. Northwestern C. & T. Co., 64 Fed. R. 928; Merchants' Nat. Bank v. Chattanooga C. Co., 53 Fed. R. 314.

29 D. A. Tompkins Co. v. Catawba Contra, Leary v. Columbia R. & S. S. Mills, 82 Fed. R. 780, 783.

30 Covington D. Co. v. Shepherd, 21 How. 112; Shainwald v. Lewis, 6 Fed. R. 166, 775; Buckeye E. Co. v. Donau Br. Co., 47 Fed. R. 6. See Brown v. Lake S. I. Co., 134 U. S. 530, 534; Sage v. Memphis & L. R. R. Co., 125 U. S. 361.

Nav. Co., 82 Fed. R. 775; Texas C. C. & Mfg. Ass'n v. Storrow (C. C. A.), 92 Fed. R. 5; Syers v. Brighton Br. Co., 11 L. T. (N. S.) 560; Mills v. Northern Ry. of B. A. Co., 23 L. T. (N. S.) 719. See Pennsylvania Co. for Insurance, etc. v. Jacksonville, T. & K. W. Ry. Co. (C. C. A.), 55 Fed. R. 131. That

34

33

35

an actual or threatened damage of a serious nature; fourthly, where a corporation has been dissolved and has no officer to attend to its affairs; 3 fifthly, where for a long time the corporation has ceased to transact business and its officers have ceased to act; sixthly, where the governing body is so divided and engaged in such mutual contentions that its members cannot act together; seventhly, at the suit of unsecured creditors, where the corporation makes no defense and waives its right to require the complainants to reduce their claims to judgment, upon proof that the corporation is insolvent, that unless the court interferes its business will be interrupted by the levy of judgments and executions, and that the continuance of such business is necessary for the convenience of the public, or possibly when such interruption will greatly depreciate the value of its assets; " and eighthly, in a few cases receivers have been appointed at the application of the corporations themselves, made before default in the payment of mortgage interest, where it was for the interest of the public that the corporate business, the operation of a railroad, should be continued without interruption, it was hopelessly insolvent, and there was danger of attempts by creditors to gain preference by attachments or otherwise in such a manner as would have stopped the operation of the railroad."

lienholders have a right to a receiver in such a case is held in Farmers' L & Tr. Co. v. Winona & Str. Ry. Co., 59 Fed. R. 957. See Herrick v. Grand Trunk Ry. Co., 7 Upper Can. 240.

33 The Late Corporation of the Church of J. C. of L. D. S. v. U. S., 136 U. S. 1; Lawrence v. Greenwich F. Ins. Co., 1 Paige (N. Y.), 587. See also Hamilton v. Accessory T. Co., 26 Barb. (N. Y.) 46; Murray v. Vanderbilt, 39 Barb. (N. Y.) 140.

For an extraordinary case, where a receiver was appointed because of a dispute with one stockholder, see Arents v. Blackwell's D. T. Co., 107 Fed. R. 338.

36 See Hollins v. Brierfield C. & L Co., 150 U. S. 371; Sage v. Memphis St. R. Co., 125 U. S. 361; Consolidated T. Co. v. Kansas C. T. Co., 43 Fed. R. 204; Doe v. Northwestern C. & T. Co., 64 Fed. R. 928; Merchants' Nat. Bank v. Chattanooga C. Co., 53 Fed. R. 314; 34 Warren v. Fake, 49 How. Pr. Park v. N. Y., L. E. & W. R. Co., 70 (N. Y.) 430.

35 Featherstone v. Cooke, L. R. 16 Eq. 298; Trade Auxiliary Co. v. Vickers, L. R. 16 Eq. 303; D. A. Tompkins Co. v. Catawba Mills, 82 Fed. R. 780. For the appointment of a receiver because of a controversy between bondholders, see Benedict v. St. Joseph & W. R. Co., 19 Fed. R. 173.

Fed. R. 641; Enos v. N. Y. & O. R. Co., 103 Fed. R. 47. But see Leary v. Columbia & P. S. Nav. Co., 82 Fed. R. 775; Texas C. C. & Mfg. Co. v. Storrow (C. C. A.), 92 Fed. R. 5.

37 Wabash, St. L. & P. Ry. Co. v. Central Tr. Co., 22 Fed. R. 138; s. C., 22 Fed. R. 272; s. c., 22 Fed. R. 513, 515; Brassey v. N. Y. & N. E. R. Co.,

39

A court has no jurisdiction to appoint a receiver of the property of a corporation or other person not a party to the suit.38 It is doubtful whether the receiver of a corporation can be appointed by a Federal court at the suit of a shareholder whose shares are not worth more than $2,000. A court of equity will often appoint a receiver of a railroad in a suit for the foreclosure of a mortgage containing a clause pledging its tolls and income, when it would not do so if no such clause were included in the mortgage.40

Usually a receiver will not be appointed at the suit of subsequent lienors over property of which a mortgagee is in possession; but an injunction may be issued to prevent the mortgagor from applying the rents and profits to any other purpose than the satisfaction of the mortgage." It has been held that an assignment made by a corporation for the benefit of creditors after the filing of a bill for the appointment of a receiver will not deprive the court of jurisdiction to appoint a receiver.42 When a railroad is in the hands of receivers pending a foreclosure suit, the court may extend the receivership over a portion of the road for the benefit of an intervenor claiming a prior lien thereupon." Where a receiver has been appointed at the suit of a judgment or other creditor, his suit may be consolidated with a subsequent foreclosure suit, and the receivership extended for the benefit of the mortgagee." Where a receiver was appointed at the suit of a creditor, with the requisite difference of citizenship, the mortgagee has been allowed to intervene, file a cross-bill to foreclose the mortgage and take the benefit of the receivership, although the mortgagor and

19 Fed. R. 663. Contra, Hugh v. McRae, Chase, 466. As to receiverships of foreign corporations, see Leary v. Columbia R. & P. S. Nav. Co. (C. C. A.), 82 Fed. R. 776; Republican M. Silver Mines v. Brown (C. C. A.), 58 Fed. R. 644; infra, § 242.

38 Hook v. Bosworth, 64 Fed. R. 443. 39 Robinson v. West Va. L Co., 90 Fed. R. 770. Contra, Towle v. American B. L. & Inv. Soc., 60 Fed. R. 131.

on its property are not to be measured by the same rules as are applied to an ordinary mortgage on a farm or house and lot, to secure one or two notes held by one mortgagee." Allen v. D. & W. R. Co., 3 Woods, 316, 326, per Woods, J.

41 U. S. v. Marich, 44 Fed. R. 19. 42 Belmont Nail Co. v. Columbia L. & S. Co., 46 Fed. R. 8.

43 Mercantile T. Co. v. Mo., K. & T. Ry. Co., 41 Fed. R. 8, 9.

44 Lloyd v. Chesapeake, C. & S. W. R. Co., 65 Fed. R. 351.

mortgagee were citizens of the same State.45 Where a receiver had been appointed over the property of a corporation which controlled a railroad company through the ownership of a majority of its stock, it was held that he should surrender possession to a receiver of the latter corporation subsequently ap pointed by a State court.46

Upon an interlocutory application, in a suit to enjoin the infringement of a patent by an insolvent defendant, a Circuit Court appointed a receiver of the profits made by such infringement. It has been held that a receiver will not be appointed to assist a trust formed to maintain a monopoly, or otherwise to aid in the prosecution of an enterprise against public policy.48

§ 241. Rules regulating the appointment of receivers.— It has been said that, in order to obtain the appointment of a receiver, the moving party must show, first, either that he has a clear right to the property itself, or that he has some lien upon it, or that the property constitutes a special fund to which he has a right to resort for the satisfaction of his claim; and, secondly, that the possession of the property by the defendant was obtained by fraud; or that the property itself, or the income arising from it, is in danger of loss from the neglect, waste, misconduct, or insolvency of the defendant. The appointment of a receiver is always in the discretion of the court, which, however, must be exercised with great circumspection,3 and is subject to review by an appellate court. It has been said, that the appointment can be made only in accordance

45 Park v. N. Y., L. E. & W. R. Co., 64 Fed. R. 190; s. c., 70 Fed. R. 641. 46 Central R. & B. Co. v. Farmers'

L. & Tr. Co., 56 Fed. R. 357.

78.

47 Parkhurst v. Kinsman, 2 Blatchf.

should be some evidence of waste or mismanagement or carelessness or fraud or extravagance, wantonness or collusion; some ground to apprehend that the property will suffer deterioration or serious injury; some

48 American B. & Mfg. Co. v. Klotz, thing to show that there is danger of 44 Fed. R. 721.

§ 241. Chancellor Buckner in Mays v. Rose, Freeman's Ch. (Miss.) R. 703, 718. See also Beecher v. Bininger, 7 Blatchf. 170; Tysen v. Wabash R. Co., 8 Biss. 247. "Mere insolvency arising from no proved fault in the management of a private corporation is not a sufficient ground. There

probable loss, or that some rights may be substantially impaired." Brawley, J., in Tr. & D. Co. v. Spartanburg Water-Works Co., 91 Fed. R. 324, 325. 2 Owen v. Homan, 4 H. L. C. 997, 1032.

3 Milwaukee & Minn. R. Co. v. Soutter, 2 Wall. 521.

4 Tysen v. Wabash R. Co., 8 Biss. 247.