As a rule the ordinary receiver pendente lite in case of corporations is regarded as representing the corporate body itself and not assignee by a voluntary deed, and not by proceedings in invitum by process of law, is distinguished from like property in the hands of a receiver by operation of law, or by an assignment made under legal compulsion. Assignments of the latter class are held inoperative upon property not situate within the territory over which the laws that make, or compel its debtor to make them, have dominion. Rhawn v. Pearce, 110 Ill. 350; Smith's Appeal, 104 Pa. 381; Walters v. Whitlock, 9 Fla. 86. (5) The principles of comity in favor of a foreign receiver in obtaining possession of a fund are not only suspended as against a citizen of the state where the property is situate, but also as against nonresident creditors of states other than that of the debtor. There are some cases that hold that if the receiver reduces the property to his possession then in such case his possession will be protected in a foreign jurisdiction, provided the property is in the foreign jurisdiction for a lawful purpose. Cf. Chicago, M. & St. P. R. Co. v. Keokuk N. L. Packet Co. 108 Ill. 317; Cagill v. Wooldridge, 8 Baxt. 580; Killmer v. Hobart, 58 How. Pr. 452; Pond v. Cooke, 45 Conn. 126; Cook v. Orange, 48 Conn. 401; Blake Crusher Co. v. New Haven, 46 Conn. 473. Contra, Humphreys v. Hopkins, 81 Cal. 557, 6 L. R. A. 792. But not so where the property is in a foreign jurisdiction for an illegal purpose. Dick v. Bailey, 2 La. Ann. 974. Where a receiver was appointed in New York, and a general assignment was made to him by the debtor, the receiver was permitted to file a bill in Michigan to foreclose a mortgage not strictly as receiver, but as assignee. Graydon v. Church, 7 Mich. 36. As to the receiver's right to sue in a foreign jurisdiction it has been held that he has no such right in the following cases: Hope Mut. L. Ins. Co. v. Taylor, 2 Robt. 278; Kronberg v. Elder, 18 Kan. 150; Commercial Nat. Bank v. Motherwell Iron & 8. Co. 95 Tenn. 172, 29 L. R. A. 164; Farmers' & M. Ins. Co. v. Needles, 52 Mo. 17; Brigham v. Luddington, 12 Blatchf. 237; Hazard v. Durant, 19 Fed. Rep. 471; Olney v. Tanner, 21 Blatchf. 540; Day v. Postal Teleg. Co. 66 Md. 354; Bartlett v. Wilbur, 53 Md. 485; Filkins v. Nunnemacher, 81 Wis. 91; McClure v. Campbell, 71 Wis. 350; Booth v. Clark, 58 U. S. 17 How. 322, 15 L. ed. 164. This case is the authority for holding that a receiver has no right to sue in a foreign jurisdiction, on which most of the foregoing cases are based. It was not the law in England when decided [1854], and had not been since the case of Falliott v. Ogden, 1 H. Bl. 123 (1789); nor was it the law of continental Europe. The doctrine had been condemned in Holmes v. Remsen, 4 Johns. Ch. 460, by Chancellor Kent, and is at variance with the following later cases: Boulware v. Davis, 90 Ala. 207, 9 L. R. A. 601; Merchants' Nat. Bank v. McLeod, 38 Ohio St. 174; Wilkinson v. Culver, 23 Blatchf. 416; McAlpin v. Jones, 10 La. Ann. 552; Lycoming F. Ins. Co. v. Wright, 55 Vt. 526; Iglehart v. Bierce, 36 Ill. 133; Graydon v. Church, 7 Mich. 36; Hunt v. Columbian Ins. Co. 55 Me. 290; Hurd v. Elizabeth, 41 N. J. L. 1; Chafee v. Quidnick Co. 13 R. I. 442; its creditors or shareholders. He derives his power under and through it, and for the purposes of litigation he takes only the rights of the corporation such as could be asserted in its own name.' But in other cases by virtue of statutory provisions the Paine v. Lester, 44 Conn. 196; Cooke v. Orange, 48 Conn. 401; Merchants' Nat. Bank v. McLeod, 38 Ohio St. 174; Bidlack v. Mason, 26 N. J. Eq. 230; Sobernheimer v. Wheeler, 45 N. J. Eq. 614; Metzner v. Bauer, 98 Ind. 427; Runk v. St. John, 29 Barb. 585; Milne v. Moreton, 6 Binn. 353; Barclay v. Quicksilver Min. Co. 6 Lans. 25; Pugh v. Hurtt, 52 How. Pr. 22; Dyer v. Power, 39 N. Y. S. R. 136; Peters v. Foster, 56 Hun, 607; New Jersey Protection & L. Bank v. Thorp, 6 Cow. 46; Hibernia Nat. Bank v. Lacombe, 84 N. Y. 367; Toronto General Trust Co. v. Chicago, B. & Q. R. Co. 123 N. Y. 37; Woodward v. Brooks, 128 Ill. 222, 3 L. R. A. 702; Rhawn v. Pearce, 110 Ill. 350; Sercomb v. Catlin, 128 Ill. 556. "The course of modern adjudications," says Pinney, J., in Gilman v. Ketcham, 84 Wis. 60, 23 L. R. A. 52, "is in favor of a liberal extension of interstate comity, and against a narrow and provincial policy, which would deny proper effect to judicial decisions of sister states under their statutes, and rights claimed under them simply because technically they are foreign and not domestic." For an instructive case on the law of international comity, see Hilton v. Guyot, 159 U. S. 113. As showing the power of the court over property in a foreign jurisdiction where it has jurisdiction over the parties, see Cole v. Cunningham, 133 U. S. 107, 33 L. ed. 538; Sercomb v. Catlin, 128 Ill. 556; Alexander v. Tolleston Club, 110 Ill. 65. A foreign receiver of a foreign corporation, appointed at the place of its domicil to whom all its assets have been assigned, has been allowed to intervene in Massachusetts and be heard in a proceeding to appoint a receiver in that state. Buswell v. Supreme Sitting O. of I. H. 161 Mass. 224. But see Fawcett v. Supreme Sitting O. of I. H. 64 Conn. 170, 24 L. R. A. 815. A receiver of one state will be appointed over a railroad extending into another state by the court of the latter state on grounds of comity. Port Royal & A. R. Co. v. King, 93 Ga. 63, 24 L. R. A. 730. To the same effect is Baldwin v. Hosmer, 101 Mich. 432. A careful examination of the foregoing cases, taking into consideration the tendency and broader liberality of our modern courts, and the increasing laxity in the application of the doctrine of stare decisis-now becoming a relic of the past—it is believed will establish the following propositions so far as personal property in a foreign jurisdiction is concerned: (1) The distinction between a voluntary transfer and a transfer by operation of law is a mere legal fiction. (2) A recognition of the rights of a foreign receiver co-extensive with the recognized rights of the person or corporation over whose property he is appointed is conducive to the best interests of interstate and international commercial relations, and is in harmony with the fundamental principles of our government, promoting as it does due and proper respect between the courts of the several states. 'Republic L. Ins. Co. v. Swigert, 135 Ill. 150, 12 L. R. A. 328; Hyde v. Lynde, 4 N. Y. 387; Higgins v. Gillesheimer, 26 N. J. Eq. 308. In this case receiver may, as the representative of creditors, disaffirm and inpeach the fraudulent acts of the insolvent debtor or corporation.' This is especially so in an action brought to wind up an insolvent corporation, in which case the receiver, represents the interests of creditors rather than the dead corporation. The receiver may also disaffirm the unlawful acts of a corporation, as where dividends have been declared in favor of stockholders of an insolvent corporation in violation of a statute.' the Vice Chancellor says: "The question in this case is, has the complainant as receiver a right to have them nullified? In the absence of a statutory provision a receiver is a mere instrument, or arm of the court, by which he holds the property in dispute for safe keeping and preservation; he is not invested with the legal title; he acts or refrains as the court directs; he is so purely the creature of the court that the property he holds is esteemed to be in custodia legis. It is clear therefore that unless the statute authorizing complainant's appointment as receiver confers upon him the right to maintain this action he cannot maintain it. His right to appear here as a suitor to impeach these conveyances must appear in the law authorizing his appointment, or he has no such right." See also Seymour v. Wilson, 16 Barb. 294; Green v. Hicks, 1 Barb. Ch. 309; Dorr v. Noxon, 5 How. Pr. 29; Foster v. Townshend, 12 Abb. Pr. N. S. 469; Coope v. Bowles, 42 Barb. 87; Hyde v. Lynde, 4 N. Y. 387; Piscataqua F. & M. Ins. Co. v. Hill, 60 Me. 178; Kennebec & P. R. R. Co. v. Portland & R. R. Co. 54 Me. 181; Brewer v. Boston Theatre Proprs. 104 Mass. 378; Re Duckworth, L. R. 2 Ch. App. Cas. 577; Leifchild's Case, L. R. 1 Eq. 231. 'Pittsburg Carbon Co. v. McMillin, 119 N. Y. 46, 7 L. R. A. 46; Vail v. Hamilton, 85 N. Y. 453; Atty. Gen. v. Guardian Mut. L. Ins. Co. 77 N. Y. 272; Underwood v. Sutcliffe, 77 N. Y. 62; Bostwick v. Menck, 40 N. Y. 383; Gillett v. Phillips, 13 N. Y. 114; Tuckerman v. Brown, 33 N. Y. 297; Curtis v. Leavitt, 15 N. Y. 44; Porter v. Williams, 9 N. Y. 142; Talmage v. Pell, 7 N. Y. 347; Gillet v. Moody, 3 N. Y. 474; Mann v. Pentz, 3 N. Y. 415; Van Cott v. Van Bruni, 2 Abb. N. C. 283, 82 N. Y. 535; Libby v. Rosekrans, 55 Barb. 217; Osgood v. Laytin, 48 Barb. 464, 5 Abb. Pr. N. S. 9; Barton v. Hosner, 24 Hun, 469; Butterworth v. O'Brien, 24 How. Pr. 438; Manley v. Rassiga, 13 Hun, 288; Osgood v. Ogden, 4 Keyes, 70; Brouwer v. Appleby, 1 Sandf. 158; Brouwer v. Hill, 1 Sandf. 629; Hoyt v. Thompson, 3 Sandf. 416; Porter v. Sabin, 149 U. S. 473, 37 L. ed. 815; Runyon v. Farmers' & M. Bank, 4 N. J. Eq. 480; Monitor Furnace Co. v. Peters, 40 Ohio St. 575; Gill v. Balis, 72 Mo. 424; Alexander v. Relfe, 74 Mo. 495; Minnesota Thresher Mfg. Co. v. Langdon, 44 Minn. 37; but see Atchison v. Davidson, 2 Pinney, 48; Hamlin v. Wright, 23 Wis. 492. 2 United States v. Church of Jesus Christ of L. D. S. 5 Utah, 538; Re Atty. Gen. v. Guardian Mut. L. Ins. Co. 77 N. Y. 272; Crandall v. Lincoln, 52 Conn. 73. And see further Corporations. 3 Minnesota Thresher Mfg. Co. v. Langdon, 44 Minn. 37; Osgood v. Laytin, 48 Barb. 464, Affirmed in 3 Keyes, 521. 39. Power to collect unpaid stock subscriptions. A receiver of an insolvent corporation being appointed to administer the whole estate so far as it is liable for the payment of its debts has power to enforce payment of arrearages of stockholders for unpaid stock, such arrearages being properly liable for the payment of the corporation debts.' In a proceeding to In Kennedy v. Thorp, 51 N. Y. 174, it was held that where a vendor from whom goods had been fraudulently obtained brings suit on the contract and prosecutes it to judgment, neither the vendor or his receiver appointed in supplementary proceedings based on such judgment can set up fraud in the sale. In Olney v. Tanner, 10 Fed. Rep. 101, affirmed in 18 Fed. Rep. 636, it was held that a receiver appointed in supplementary proceedings is not vested by virtue of his appointment with the title of property fraudulently conveyed by the debtor. The court appointing him cannot put him in possession of such property. It will not authorize his meddling with it nor protect him if he does so. But he may assail the fraudulent transaction by a suit for that purpose to the extent a creditor might do and not otherwise and recover to the extent such creditor might recover. Bostwick v. Menck, 40 N.Y. 383; Brown v. Gilmore, 16 How. Pr. 527; Field v. Sands, 8 Bosw. 685. And in such case if an assignee in bankruptcy of the debtor has been appointed he alone can file a bill to set aside the fraudulent conveyance. Olney v. Tanner, 18 Fed. Rep. 636; Cf. Teller v. Randall, 40 Barb. 242; Becker v. Torrance, 31 N. Y. 637; Miller v. MacKenzie, 29 N. J. Eq. 292. But see Higgins v. Gillesheimer, 26 N. J. Eq. 308; Parker v. Browning, 8 Paige, 388. A receiver has power to obtain possession and control of assets retained and concealed by the officers of a corporation. Brandt v. Allen, 76 Iowa, 50, 1 L. R. A. 653, and in such case defendants will not be heard to say that the assets are not needed for the payment of the lawful debts of the company. McCarty's Appeal, 110 Pa. 379. 'Heman v. Britton, 88 Mo. 549; Showalter v. Laredo Improv. Co. 83 Tex. 162; Pentz v. Hawley, 1 Barb. Ch. 122; Calkins v. Atkinson, 2 Lans. 12; Farmers' & M. Bank v. Jenks, 7 Met.. 592; Rankine v. Elliott, 16 N. Y. 377. And suit may be collectively or individually against the shareholders. Van Wageman v. Clark, 22 Hun, 497. And in some states may make assessments as in mutual insurance companies. Tobey v. Russell, 9 R. I. 58; Embree v. Shideler, 36 Ind. 423; McDonald v. Ross-Lewin, 29 Hun, 87; Sands v. Sanders, 28 N. Y. 416; Jackson v. Roberts, 31 N. Y. 304; Downs v. Hammond, 47 Ind. 131; Frank v. Morrison, 58 Md. 423; Stillman v. Dougherty, 44 Md. 380; Elderkin v. Peterson, 8 Wash. 674; Great Western Teleg. Co. v. Gray, 122 Ill. 630; Clark v. Thomas, 34 Ohio St. 46; Merchants" Nat. Bank v. Northwestern Mfg. & Car Co. 48 Minn. 361; Minnesota Thresher Mfg. Co. v. Langdon, 44 Minu. 37; Stewart v. Lay, 45 Iowa, 604; Gaslight & Bkg. Co. v. Haynes, 7 La. Ann. 114; New Orleans Gaslight Co. v. Bennett, 6 La. Ann. 457; Stark v. Burke, 5 La. Ann. 740. A receiver in ordinary creditors" recover unpaid stock in a banking corporation the receiver may proceed in equity, he being the representative of the creditors, not on the ground of there being no legal remedy, but upon the ground that the statute gives a new remedy for a new state of things, and in such a proceeding the shareholder is not at liberty to urge, as a defense, that he is deprived of a trial by jury, for the reason that in accepting the franchises of the corporation the shareholder voluntarily subjected himself to the terms and conditions accompanying such franchises.' He may also proceed against a bank director to recover a penalty incurred for illegally paying out a portion of the stock of the bank, and, by statute, may sue in his own name. But it has been held in a recent case that the power of a receiver to institute proceedings against the stockholders of an insolvent corporation to set aside the transactions by which unpaid stock was surrendered and paid up stock issued in lieu thereof, was derived solely from statutory authority, and in the absence of such statutory power the receiver could not proceed.' suits has no power to enforce the stock liability of shareholders. Mann v. Pentz, 3 N. Y. 415. Nor has he in a proceeding brought by him to enforce stock liability, where he represents the corporation and the shareholders and not the creditors. Billings v. Robinson, 28 Hun, 122, affirmed in 94 N. Y. 415; Republic L. Ins. Co. v. Swigert, 135 Ill. 150, 12 L. R. A. 328. But see Great Western Teleg. Co. v. Gray, 122 Ill. 630. 1Sagory v. Du Bois, 3 Sandf. Ch. 466. As to the right of the receiver to enforce stock subscriptions see generally: Illinois: Great Western Teleg. Co. v. Gray, 122 Ill. 630. Iowa: Stewart v. Lay, 45 Iowa, 604. Minnesota: Merchants' Nat. Bank v. Northwestern Mfg. & Car Co. adoption of the New York Code it was necessary to enforce such liability by a bill filed in behalf of all the creditors against the corporation, making all the stockholders also defendants. Mann v. Pentz, 3 N. Y. 415, reversing 2 Sandf. Ch. 257; Wallace v. Milligan, 110 Ind. 498. As to the rule in Louisiana see Gaslight & Bkg. Co. v. Haynes, 7 La. Ann. 114; New Orleans Gaslight Co. v. Bennett, 6 La. Ann. 457; Stark v. Burke, 5 La. Ann. 740. See this subject further under title Corporations. |