tration and in other cases where they are ordinarily appointed after judgment applies as well in the case of a corporation as of an individual.

The limitation of the jurisdiction only extends to preventing courts from exercising it to take entire possession of the corporation, and thus accomplish indirectly what cannot be done directly except by another method, namely, the dissolution of the corporation.1

The basic principle of the rule which denies a court of equity the authority to appoint a receiver of a corporation without a statute conferring it under circumstances which would warrant the appointment of one in the case of an individual is that such courts in administering relief may not proceed contrary to a positive rule of law. Now the responsibility of a corporation for abuse of its franchise is on the state, and a judgment of forfeiture, which is one form of dissolution, cannot be rendered at law at the suit of an individual; nor can the same be done in substance in equity by putting an end to all its operations, taking all its property into possession and its motive power away, and making distribution, leaving nothing but an empty

name.

§ 843. Jurisdiction under statutes.-The lack of harmony in the decisions of courts attempting to fix and define the jurisdictional limits in the matter of appointing re

1 Bangs v. McIntosh, 23 Barb. 591; Howe v. Deuel, 43 Barb. 504; Waterbury v. Merchants' Union Express Co., 50 Barb. 637; Neall v. Hill, 16 Cal. 145. See also Baker v. Administrator of Backus, 32 Ill. 79. But see Blatchford v. Ross, 54 Barb. 42; s. c. 5 Ab. Pr. N. S. 434; 37 How. Pr. 110; Adler v. Milwaukee Patent Brick Co., 13 Wis. 57. The appointment of a receiver for a corporation does not work a dissolution, and a pending suit may proceed to judgment, in the name of the corporation, for the benefit of one to whom the receiver has duly assigned the demand in suit. Hasselman v. Japanese Development Co. (Ind.). 27 N. E. 318.

ceivers has to a great extent disappeared in the states which have legislated on the subject.1

Undoubtedly a receiver of specific property may be appointed under the statutes of most of the states where it is the property of a corporation, with like effect and on the same grounds as where it belongs to a natural person. For instance, in the case of "an action by a mortgagee for the foreclosure of his mortgage and sale of the mortgaged property where it appears that the mortgaged property is in danger of being lost," etc.," no better reason can exist for appointing a receiver in a proper case where natural persons are interested than if one or both the parties whose property is involved are corporations.3

1 Under Laws N. Y. 1880, c. 245, providing for the appointment by any competent court of a receiver to sequestrate the property of a corporation, which repeals Laws 1870, c. 151, giving to the supreme court alone the power to appoint a receiver in such proceedings, the superior court of New York City may appoint a receiver of a corporation in sequestration proceedings. Jelly v. The Paraiso Reduction Co., 1 N. Y. S. 111.

The act (Supp. Revision N. J., p. 834, pl. 42), authorizing the chancellor to appoint a receiver if a railroad neglects to run daily trains, confers such power upon the court of chancery, and not upon the chancellor in his personal capacity. The Delaware Bay & C. M. R. Co. v. Merkley, 45 N. J. Eq. 149; 16 A.

436.

Acts Ga. 1880-81, p. 125 (Code, sec. 3149 a-3149 g.), provide that where a private corporation fails to pay a debt at maturity on demand, and where the corporation is insolvent, a court of equity may, under a creditor's bill, to which one or more of the creditors having unpaid matured debts shall be a necessary party, proceed to collect the assets, and the chancellor may grant injunctions and appoint receivers for the collection and preservation of the assets, and may at any time take steps to bring the matter to a final hearing. Wilcoxon Manuf'g Co. v. Atkson, 78 Ga. 338.

Acts Tex. 1887, p. 120, sec. 3, providing for the appointing of a receiver where a corporation has been dissolved or has forfeited its corporate rights, is unconstitutional, and the stockholders and lienholders need not be before the court. East Line & R. R. R. Co. v. State (Tex.), 12 S. W. 690; 75 Tex. 434.

Where a state court has jurisdiction of the parties and the subject matter, its judgment against the receiver of a United States court is final and conclusive. Central Trust Co. v. St. Louis A. T. Ry. Co., 41 F. 551. In Nebraska the supreme court has jurisdiction to appoint receivers of insolvent banks. Sec. 14 L. 1889, p. 397. State v. Com. B'k (Neb.), 44 N. W. 998.

1 Code Civ. Proc. Cal., sec. 564.

2 In Adler v. Milwaukee Pat. Brick Manuf. Co., 13 Wis. 57, a case where

§ 844. The principle practically disregarded in railroad cases. But the principle of statutes taking away this power from courts of equitable jurisdiction is in many instances practically disregarded. For instance, receivers are frequently appointed over the property of railroad corporations upon the application of mortgage bondholders, for the purpose of preserving their interests. and applying the income to the satisfaction of the secured indebtedness.

a judgment creditor after his execution had been returned unsatisfied filed a bill on behalf of himself and other creditors against the corporation and the delinquent stockholders for an account of the assets and the appointment of a receiver, DIXON, J., in delivering the opinion of the supreme court, said: "The practice in such cases, in those states where the mode of closing up the affairs of non-paying and insolvent corporations, and of distributing the proceeds of their property and effects among their creditors, is governed by the common law, as indicated by the authorities to which reference has been made, is precisely that which was adopted by the appellant in this case. The creditor is first to establish his claim by a judgment at law, and then after execution issued and returned in whole or in part unsatisfied, he may file his bill in his own behalf, and in behalf of such other creditors of the corporation as may elect to become parties thereto, against the corporation and its delinquent or withdrawing stockholders, alleging the recovery and non-payment of his judgment, and praying the decree or order of the court that an account of the assets and debts be taken and a receiver appointed and that the stockholders and officers pay in and account to the receiver for so much of the capital stock as will be sufficient to pay the debt of the plaintiff, and those of such other creditors as may choose to join him and come in under the decree; and that the receiver be directed to apply the same in discharge thereof." See also, Spear v. Grant, 16 Mass. 9; Vose v Grant, 15 Id. 505; Wood v. Dummer, 3 Mason, 308; Ward v. Griswoldville Manuf. Co., 16 Conn. 593. In the last case cited the bill was filed by the creditors of a corporation asking the court to compel the subscribers to pay into the hands of a receiver sixty per cent. upon certain shares of stock then remaining unpaid. WAITE, J., in delivering the opinion of the court granting the relief asked for, said: "It is in the power of a court of chancery to do more ample and complete justice to the parties interested than can possibly be done in a court of law.

The bill shows that the plaintiffs have proceeded as far as they can at law They have obtained judgments against the corporation-made demand upon the company for payment of these executions -and these executions have been rereturned wholly unsatisfied. They are now remediless, unless the corporate funds can be reached, by the aid of a court of chancery, on a writ of mandamus. The former, in our opinion, is decidedly the more appropriate remedy. Upon the whole, we think that the plaintiffs, upon the allegations contained in their bill, are entitled to relief; and that, consequently, the demurrer must be overruled.

And receivers so appointed usually succeed to the control and operation of the railroads, superseding and entirely displacing the management appointed by the stockholders. In such cases, while the corporation, strictly speaking, is not dissolved, yet its existence and ownership are only nominal during such receivership. And receivers may be appointed upon the application of simple subsequent creditors for the purpose of a sequestration of the earnings of a corporation owing and performing public duties, after exhausting all the property other than that which cannot be seized and sold under attachment or execution, because necessary to enable the company to perform its public duties.1

§ 845. Further considered.-Courts of equity possess no power to pass upon the question whether or not a corporation has forfeited its charter or decree a forfeiture. But after a court, in the exercise of its common law jurisdiction, has rendered judgment of forfeiture upon quo warranto proceedings instituted and prosecuted by the state, it may then, sitting as a court of equity, make an order appointing a receiver to preserve the trust fund and equitably distribute it.

But the court cannot, upon quo warranto proceedings, appoint a receiver before judgment of forfeiture, although an injunction may properly issue to prevent the corporation from doing any illegal act or from disposing of its funds.2

§ 846. The power to appoint upon forfeiture not absolute. But the power of the court to appoint a receiver upon judgment of forfeiture of corporate existence is by no means an unqualified right.

1 See Covington Drawbridge Co. v. Shepherd, 21 How. 112.

? People v. Washington Ice Co., 18 Ab. Pr. 382.

It is generally provided by statute that in case of dissolution the directors shall remain the trustees for the stockholders and creditors for the purpose of winding up and settling the affairs of the corporation. Such provision is construed by the courts as applying in case of dissolution at suit of the state in the absence of a clear expression of a contrary intention. There is usually another statute defining the jurisdiction and prescribing the duties of courts of equity in the matter of appointing receivers, one occasion for its exercise being the dissolution of the corporation. The two provisions considered together require the first mentioned to read subject to some such proviso as this, "provided, upon judgment of forfeiture, application be made by the proper parties, showing sufficient cause for the appointment of a receiver, independent of the fact of forfeiture. As will be seen, franchises which have been usurped or abused by a corporation may be forfeited, leaving the franchise of being a corporation intact, or the franchise of being a corporation may be forfeited without affecting the franchises owned by transferees of the same from the corporation other than that of being a corporation. But in neither case does the bare fact of forfeiture and judgment thereon authorize the sequestration of property rights acquired in the exercise of any franchise. Property which has been acquired and become vested before forfeiture whether in the legitimate use or in the abuse of franchises cannot be taken by the state except for a public use and upon fair compensation. Even the franchises owned and possessed by the corporation, where they have been conveyed away under statutory authority, are vested property in the hands of the transferee for value and enjoy im

1 Infra, §§§ 986, 989, 1052.