itors are entitled to look for the satisfaction of demands, the court is warranted in case of waste or mismanagement and threatened loss of such fund in appointing a receiver pendente lite for its preservation.1

So in the case of corporations organized in a foreign jurisdiction but doing business in a particular state where a portion of its assets are situated after it has become insolvent, and proceedings for its voluntary dissolution have been commenced in the state of its creation and principal place of business, it has been held that in the absence of any other adequate remedy a court of equity would treat the fund held by the managers of such foreign corporation as a trust, and give the application to have it preserved and applied to the purposes to which it was entrusted to them the character of a proceeding in rem to the extent of taking it into the hands of a receiver.

Under these circumstances the court of the state in which the corporation is foreign having jurisdiction over the officers who are resident there, as well as the property there located, may properly interfere to preserve the fund when it is endangered by the insolvency or improper conduct of such officers.2

1 Where it appeared upon a bill filed by persons insured in an insurance and loan association against the directors and managers that there had been gross mismanagement upon their part and that a large portion of a trust fund out of which the assured were to be paid had been lost through the negligence of the defendants, and that there was great danger of the remainder being wasted, it was regarded as a plain case for the appointment of a receiver. Evans v. Coventry, 5 De G. M. & G. 911. In this case Lord Justice TURNER said: "What the court has to look at is the position of the parties on the record. According to the allegation on the bill, verified by affidavit or admitted by the answer, the plaintiffs are in the position of parties who have a charge on the funds of what I may for the present purpose call the original association. It appears that funds of that association have been lost by the act of the treasurer whose conduct it was the duty of the other defendants to superintend."

Prima facie, therefore, there appears a clear case for the interference of the

court.

2 Redmond v. Hoge, 3 Hun, 171.

§ 854. Of foreign corporations under special statute.— At present courts of equitable jurisdiction are empowered under the New York Code of Procedure to appoint receivers over the effects of foreign corporations upon the application of judgment creditors generally. and are fully authorized to take charge of the property of such corporations in order to preserve it for the benefit of creditors and shareholders.1

But the jurisdiction in that class of cases is limited to the narrowest bounds consistent with a due respect to the positive requirements of the statute.

It is held not to apply where the foreign corporation has been dissolved by the government of its creation and domicile, where the decree of dissolution was not absolute and left the corporation in existence for certain specified purposes, and it has property within the limits of jurisdiction of the court under control of its officers resident in New York. The courts will not appoint a receiver of the assets in New York upon the sole ground that such dissolution proceedings have been instituted, or upon grounds which would not have availed for that purpose in the foreign country."

§ 855. Magnitude of interests involved, important. Among the circumstances which the court may consider in passing upon the motion to appoint a receiver are the magnitude of the respective interests involved, and the resulting inconvenience from granting or refusing the order.3

1 Murray v. Vanderbilt, 39 Barb. 140; De Bemer v. Drew, 37 Barb. 438; Barclay v. Quicksilver Min. Co., 3 Ab. Pr. N. S. 283. The right of a judgment creditor of a corporation, on the return of execution unsatisfied, to maintain an action for the sequestration of its property, and for the appointment of a receiver is confined to domestic corporations by the term of Code Civil Proc. N. Y. § 1784, which confers the right; and hence no such action will lie against a foreign corporation. Burgoyne v. Eastern & W. Ry. Co., 13 N. Y. S. 537.

2 Hamilton v. Accessory Transit Co., 26 Barb. 46.

3 Where the petitioner was the holder of only a very small portion of the

The nature of the business in which the corporation is engaged is an important consideration, and if the public have a considerable interest in the continuous prosecution of the enterprise, as in the case of railroad and such quasi public corporations as are operated on a large scale and require peculiar knowledge of public requirements, a court will not appoint a receiver except upon the presentation of a strong case. And instead

of appointing a receiver to operate a railroad the court will sometimes order the earnings of the road to be paid over to and disbursed by a suitable person.

§ 856. Appointment not usually made without notice to the opposite party. The practice is subject, of course, to such modifications as may have been made by statute in the particular jurisdiction where the question arises; but a receiver will not usually be appointed upon an ex parte application, without giving the corporation an opportunity to be heard though a temporary injunction may very properly issue to restrain acts which would work irreparable mischief pending the hearing.

The usual practice is when a petition duly verified has been filed to enter an order on the defendant to show cause at a future day why the prayer of the petitioner should not be granted.1

stock of the corporation over which the appointment of a receiver was asked, the court refused to make the order except upon condition that he should execute a bond of indemnity against damage to the other parties in interest. Addison v. Lewis, 75 Va. 701. Where it was necessary to prevent a valuable land grant made to a railway company from lapsing and reverting to the government that the company should construct a line for a certain distance within a given time, and it was about to fail in compliance with the condition for want of funds, a receiver was appointed upon application of the bondholders, whose principal security was the lands in question; and the receiver so appointed was empowered to borrow money to complete the unfinished portions of the road and secure repayment of the same by creating a lien on the road and lands of the company. Kennedy v. St. Paul & Pac. R. R. Co., 2 Dillon. 448.

1 Devoe v. Ithaca, etc., R. Co., 5 Paige, Ch. 521.

§ 857. Appointment cannot be collaterally attacked.— After the application has been heard and full and fair opportunity been given to the corporation to show cause, if any it has, why the prayer of the petition should be denied, the court should exercise great caution and give due consideration to the effect of the appointment upon all the interests involved.1

But no errors which the court may have committed in making the order appointing a receiver may be taken advantage of collaterally. No such error or abuse of discretion will avail as a defence to an action by the receiver for the collection of unpaid subscriptions to the capital stock."

1 Bisson v. Curry, 35 Iowa, 72; following French v. Gifford, 30 Iowa, 148; Verplank v. Mercantile Insurance Co., 2 Paige, 438; Rogers v. Dougherty, 20 Ga. 271; People v. Susquehanna R. Co., 7 Ab. Pr. N. S. 265; Whitehead v. Wooten, 43 Miss. 523; Caillard v. Caillard, 25 Beav. 512; Voshell v. Hynson, 26 Md. 83; Crowder v. Moone, 52 Ala. 220; Howe v. Jones, 57 Iowa, 130.

2 Stewart v. Lay, 45 Ia. 604. If such proceedings were erroneous they were not void, and the possession of the receiver is legal, and he cannot be dispossessed at the suit of another receiver appointed afterwards by another court of co-ordinate jurisdiction. Bonner v. Hearne (Tex.), 12 S. W. 38.

Where the record of a case shows that a receiver was appointed on the same day on which the action was commenced therefor, it will be presumed that each was done in its proper order. Elwood v. First Nat. Bank, 41 Kan. 475; 21 P. 673.

Part of the property of a corporation was sold in good faith to petitioners who were among its stockholders, pending proceedings to vacate its charter for abuse of its corporate privileges and the appointment of a receiver. Held, that the fact that the petitioners in their character of stockholders contested the appointment of a receiver for the corporations property cannot be construed as a voluntary submission to the jurisdiction of the court in their character of purchasers so as to estop them from questioning the validity of the appointment otherwise than on appeal. Havemeyer v. Superior Court, 84 Cal. 327; 24 P. 121; State Journal Co. v. Commonwealth Co., 43 Kan. 93; 22 P. 982.

The creditor, having received dividends from the receiver, is estopped from denying the validity of his appointment. Greeley v. Provident Sav. Bank (Mo.), 15 S. W. 429. In an action brought under Gen. St. Minn. c. 76, § 9, providing for the appointment of a receiver of the property and effects of a debtor corporation, when an execution against the corporation has been returned unsatisfied, the return of the execution unsatisfied by the sheriff is conclusive so long as it remains of record in force, and cannot be collaterally assailed by inquiries into the conduct of the officer in executing it, or into the existence of

The same rule applies to assessments ordered by the court. The stockholder cannot defend an action upon such assessment on the ground that the court, in appointing the receiver and ordering the assessments, was imposed upon by fraud, or that the corporation is not indebted, or that the action is prosecuted from other motives than that of obeying the order of the court. All such defences should be interposed at the time when the appointment was made or the assessment ordered, and in the same proceeding.1

Failing to do this, the only remedy of a party who considers himself aggrieved by the order is to institute proceedings to test its validity."

And the correction of an order which is irregular must be sought by a motion in the court which made it. An independent action for that purpose will not lie, though the plaintiff was not a party to the proceeding in which the order was made.3

But there would be evident injustice in a strict, undeviating application of this rule. It might occur that the managing agents of the corporation had acted collusively with a creditor in securing or allowing the receiver to be appointed, or that through some neglect, mistake or misfortune on their part an available existing and meritorious defence had not been interposed to the original proceeding.

Under these circumstances, it would be very likely to happen that no notice of the appointment or assessment would reach the stockholder until the demand

any property which he might have levied on by virtue of it. Spooner v. Bay St. Louis Syndicate, 44 Minn. 401; 46 N. W. 848.

1 Schooner v. Hinckley, 48 Ia. 32.

* Vermont, etc., R. Co. v. R R. Co., 47 Vt. 792; Covey v. Lang, 43 How. Pr.