and subordinate relation, he has and can exercise no powers other than those derived from statutes and expressed in and implied by the order of appointment, or derived from the established practice of courts of equity.' His general duties are to administer the trust honestly and faithfully in the interest of the beneficiaries according to law, and to obey such orders respecting the same as he shall from time to time receive from the court. § 840. What facts will authorize appointment.--A receiver will be appointed whenever it is made to appear that it is necessary, either to preserve the estate of the Receivers can have general advice and instructions, and, in particular cases, particular advice and instructions, on application to the court. If there are parties in interest, and they have their day in court, the advice may be decisive; but if the matter is ex parte, such advice is binding only on the receivers, for the judge may change his mind on hearing full argument. Missouri Pac. Ry. Co. v. Texas & P. Ry. Co., 31 F. 862. If the receiver of a railroad, with the consent of the court of chancery, lease and operate another railroad not in the hands of the court of chancery, he stands, as to such business, not as a receiver in the sense that he is in that business an officer of the court, but as a party sui juris, acting as his own principal and upon his own responsibility. The order of the court of chancery sanctioning such engagement is available to him in the settlement of his accounts as receiver of the roads in the hands of that court, but not as the gauge of his responsibility to third persons dealing with him. Lyman v. Central Vermont R. Co., 59 Vt. 167; 10 A. 346. Where it appears to the court controlling the management of an insolvent railroad that the contracts of the receiver are so ill advised and injudicious as to be improvident, such as contracts for materials which cannot be fulfilled within the probable limit of the receivership, or in excess of the reasonably anticipated needs of the road, it will not enforce performance of the contracts on the part of the receiver and compel the acceptance of the materials contracted for, nor award damages for non-fulfillment or for loss of profits, but may properly reimburse the contractor out of the trust fund for the expense incurred in good faith in making preparations for carrying out the contracts. Vanderbilt v. Centr. R. Co., 43 N. J. Eq. 669; 12 A. 188. 1 Devendorf v. Dickinson, 21 How. Pr. 275, 278; Booth v. Clark, 17 How. 322; and see s. c. 68 N. C. 400; Skinner v. Maxwell, 66 N. C. 45; Corey v. Long, 43 How. Pr. 497; s. c. 12 Ab. Pr. N. S. 427; Battle v. Davis, 66 N. C. 252; Hunt v. Wolfe, 2 Daly, 303; Hooper v. Winston, 24 Ill. 353; Ellicott v. Warford, 4 Md. 80; Kaiser v. Kellar, 21 Iowa, 95; Coburn v. Ames, 57 Cal. 201. corporation after it has been abandoned by the management and there is no competent person authorized to take possession and control it, or that the agents or other persons so authorized are misusing or misapplying the trust fund to the injury of creditors, or are about to place it beyond the court's jurisdiction.1 As in the administration of other extraordinary remedies, the exact limits within which courts of equity will appoint a receiver and beyond which they will not resort to this means of securing rights and preventing a failure of justice have never been definitely expressed in a form applicable alike to all cases. But the general principles governing the matter apply to corporations to the same extent and under the same circumstances as to individuals. "It is a peremptory measure, whose effect, temporarily, at least, is to deprive of his property a defendant in possession, before a final judgment or decree is reached by the court determining the rights of the parties. It is, therefore, not to be exercised doubtingly, but the court must be convinced that the relief is needful, and that it is the appropriate means of securing an appropriate end. And since it is a serious interference with the rights of the citizen, without the verdict of a jury and before a regular hearing, it should only be granted for the prevention of manifest wrong and injury. And because it divests the owner of property of its possession before a final hearing, it is regarded as a severe remedy, not to be adopted save in a clear case, and never unless plaintiff would otherwise be in danger of suffering irreparable loss." 1 High on Receivers, sec. 3. See also In re Merchants' Ins. Co., 3 Biss. 162; Hunt v. Wolfe, 2 Daly, 303; Mays v. Rose, Freem. (Miss.), 703; Opinion of FRICK, J., in Speights v. Peters, 9 Gill, 476; Crawford v. Ross, 39 Ga. 44; Latham v. Chafee, 7 Fed. Rep. 525; Headley v. Improvement Co. (N. J.), 10 A. 471; Beverly v. Brooke, 4 Grat. 187; Whitehead v. Wooten, 43 Miss. 523; Chicago & A mere allegation of the company's insolvency is not sufficient to authorize the appointment of a receiver. Alleghany Oil & Mining Co. v. U. S. Petroleum Co., 57 Pa. St. 83; s. c. 6 Phil. 521. An illustration of the care taken to prevent resulting hardship in the exercise of this branch of jurisdiction was given in a case involving large interests, the corporation transacting a large business. Upon the application of a judgment creditor seeking the enforcement of his judgment against the corporation for a receiver, the court gave the defendant an opportunity and reasonable time to give security in lieu of the appointment. Barclay v. Quicksilver Mining Co., 9 Abb. Pr. N. S. 283. The appointment held proper where it appeared that the entire capital stock of a railroad company and more had been expended in building and equipping the railroad, and an indebtedness of at least $1,100 had been incurred, and subsequently mortgage bonds to the amount of $29,000 had been issued, but the indebtedness had not been liquidated, or the interest on the bonds paid, that the company was insolvent. Sewell v. Cape May & S. P. R. Co. (N. J.), 9 A. 785. See also, Barbour v. National Exchange Bank, 45 Ohio. St. 133; 12 N. E. 5; Pyles v. Riverside Furniture Co., 30 W. Va. 123; 2 S. E. 909; Consolidated Tank Line Co. v. Kansas City Varnish Co., 43 F. 204. But the mere disagreements of the parties as to the management of a railroad which is mortgaged furnish no foundation for the appointment of a receiver. That can only be done as an incident to some relief falling within the jurisdiction in relation to the contracts of the parties. The appointment of a receiver simply to manage the property is not within the power of the court of equity. American Loan & Trust Co. v. Toledo C. & S. Ry. Co., 29 F. 416. In the case of Pyles v. Riv. Fur Co., supra, a receiver was appointed because the whole scheme of a bill was to set aside trust deeds executed by a corporation on grounds not recognized in law, and to distribute the proceeds of the property among the creditors pro rata, and there was also a charge in the bill that the trustees had unreasonably delayed executing the trusts, and the property was wasting, and that the property would not pay the several creditors under the trust. Appointment made when the wells of a natural gas company becoming practically idle and its stock worthless, most of its members united in organizing a new company, and were about to turn over to it the pipe in the mains, which was the only valuable property left. Appeal of Hite Natural Gas Co.. 118 Pa. St. 436; 12 A. 267; Appeal of American Tube & Iron Co., Id. Where a judgment creditor of a railroad set forth the precarious condition of the road, and the necessity for a receiver, although he had not sued out execution, deeming it useless, and no objection was made for such failure. Sage v. Memphis & L. R. Co., 125 U. S. 361; 8 S. Ct. 887. Where it appeared that a railroad heavily mortgaged had made several defaults in payment of interest aggregating over $1,000,000; that the business was decreasing, with probability of further decrease from competition with new lines; that the bondholders were not in harmony; that a foreclosure was about to be decreed; and that no other way existed for applying the rents and profits of the road to its debts. Mercantile Trust Co. v. M. K. & T. R. Co., 36 F. 221. Where a "trust " has been declared illegal, each certificate holder has the right to demand a settlement of the affairs of the trust and the appointment of The facts and circumstances should be stated from which its insolvency may be determined by the court.1 Where the effect of the appointment of a receiver would be to destroy the business of the corporation, the court will not make the appointment except upon the clearest evidence.2 § 841. In the nature of an equitable execution.—No literary effort, by whatever degree of legal acumen aided, could give a better view of the effect of the appointment of a receiver than the following: "The order of appointment is in the nature, not of an attachment, but a sequestration: it gives in itself no advantage to the party applying for it over other claimants, and operates prospectively upon rents and profits, which may come to the hands of the receiver, as a lien in favor of those interested, according to their a receiver, though the trustees are endeavoring to effect a reorganization on a legal basis. Cameron v. Havemeyer, 12 N. Y. S. 126; Havemeyer v. Brooklyn Sugar Refinery, Id. Appointment held proper under the following circumstances: The plaintiff invented a secret code of letters, figures, and characters showing the cost and selling price of its goods in copies of its catalogue furnished its travelling salesmen. Copies sent to customers did not contain the code figures. The defendant bought a catalogue from a customer, and, by collusion with a travelling salesman, copied into it the code characters from the salesman's catalogue, and obtained from him a key to the code. Simmons Hardware Co. v. Waibel (S. D.), 47 N. W. 814. 1 Newfoundland, etc., Co. v. Schack, 40 N. J. Eq. 222; 1 A. 23. 2 Semple v. Flynn (N. J.), 10 A. 177. Where the assets of a company consist of outstanding accounts of a few thousand dollars in all, and complainant, who had the right to control them, is able to respond to defendant for any money which may be due to him, a receiver will not be appointed on application of defendant. Wagoner v. Warne (N. J.), 14 A. 215. For the purpose of appointing a provisional receiver it is not necessary that all the grounds therefor should be set forth in detail in the plaintiff's petition. Elwood v. First Nat. Bank, 21 P. 673; 41 Kan. 475. On application by creditors and policy-holders of an insurance company for an injunction and the appointment of a receiver, the offering by defendant after hearing and before decision of a voluntary bond is no reason for denying the application. Harrison v. Cotton States Life Ins. Co., Am. Dig., 1890, p. 3288. rights and priorities in or to the principal subject out of which these rents and profits issue. In the exercise of this summary jurisdiction, a court of equity reverses, in a great measure, its ordinary course of administering justice; beginning at the end and levying upon the property a kind of equitable execution, by which it makes a general instead of a specific appropriation of the issues and profits, and afterwards determining who is entitled to the benefit of its quasi process. But acting, as it often must of necessity, before the merits of the cause have been fully developed, and not unfrequently when the proper parties in interest are not all before the court, it proceeds with much caution and circumspection, in order to avoid disturbing unnecessarily or injudiciously legal rights and equitable priorities." 1 § 842. Exercise of jurisdiction in corporation cases conferred by statute.-Courts of equity have no general power to appoint a receiver of the property of a corporation where such appointment would be equivalent to a dissolution of the corporation at the suit of a private party. Such power where it exists is derived from statutes conferring it upon the court. The necessary result of the appointment of a receiver of a corporation to wind up its affairs is to displace the management by its agents and substitute that of the court, and to do all and everything necessary to protect the rights of the creditors and shareholders which is the sum and substance of the whole duty of the corporation or its representatives upon a dissolution.2 But the general power to appoint a receiver of property taken under execution or on a process of seques 1 BALDWIN, J., in Beverly v. Brooke, 4 Gratt (Va.), 187. |