In Leo v. Green (52 N. J. Eq., 1) the Chancellor held that a delay for § 79-81 eight years in appealing from a receiver's disallowance of a claim, where repeated notices had been given of an order limiting appeals, was a bar to any relief.

Where there is the same receiver for two corporations, one of which, as part of its assets, owns stock in the other, a creditor of the one may appeal from an allowance of a claim against the other.

(Blake v. Domestic Mfg. Co., 38 Atl. Rep., 241.)

79. Upon application receiver to be substituted as plaintiff in suits pending at time of appointment. Such receiver shall, upon application by him, he substituted as party plaintiff or complainant in the place and stead of the corporation in any suit or proceeding at law or in equity which was pending at the time of his appointment.

P. L. 1829, p. 63; Act of 1875, § 81.

80. Actions not to abate by death of receiver.-No action against a receiver of a corporation shall abate by reason of his death, but, upon suggestion of the facts on the record, shall be continued against his successor, or against the corporation in case no new receiver be appointed.

81. Court may order receiver to sell incumbered property in litigation free of liens.-Where property of an insolvent corporation is at the time of the appointment of a receiver incumbered with mortgages or other liens, the legality of which is brought in question, and the property is of a character materially to deteriorate in value pending the litigation, the court of chancery may order the receiver to sell the same, clear of incumbrances, at public or private sale, for the best price that can be obtained, and pay the money into the court, there to remain subject to the same liens and equities of all parties in interest as was the property before sale, to be disposed of as the court shall direct.

P. L. 1866, p. 296; Act of 1875, § 84.

This is a supplement to a statute against frauds, is remedial in its nature, and should receive a liberal construction. The object of the Legislature was the prevention of loss by the depreciation in value of the property, pending protracted litigation. The mischief and the remedy proposed are plainly apparent upon the face of the act. It was not intended to confine the remedy to mischief arising from litigation of any particular character, but to all litigations between incumbrancers respecting the validity, extent or priority of their liens. The act must be so construed as to suppress the mischief and advance the remedy. (Randolph v. Larned, 27 N. J. Eq., 557, 560.)

§ 82-83

82. Receiver of railroad, public work, etc., may sell or lease principal work, franchise, etc.-Whenever a receiver of a corporation shall have charge of a canal, railroad, turnpike or other work of a public nature, in which the value of the work is dependent upon the franchise, and in the continuance of which the public as well as the stockholders and creditors have an interest, the receiver may sell or lease the principal work for the construction whereof the said corporation was organized, together with all the chartered rights, privileges and franchises belonging to it and appertaining to such principal work; and the purchaser or purchasers, lessee or lessees of such principal work, chartered rights, privileges and franchises, shall thereafter hold, use and enjoy the same during the whole of the residue of the term limited in the charter of said corporation, or during the term in such lease specified, in as full and ample a manner as such corporations could or might have used and enjoyed the same; subject, however, to all the restrictions, limitations and conditions contained in such charter; provided, that nothing in this section. contained shall be so construed as to apply to or in anywise affect any corporation authorized by law to exercise banking privileges.

P. L. 1842, p. 164; P. L. 1870, p. 55; Act of 1875, § 85.

83. Laborers and workmen to have first lien on assets. In case of the insolvency of any corporation the laborers and workmen, and all persons doing labor or service of whatever character, in the regular employ of such corporation, shall have a first and prior lien upon the assets thereof for the amount of wages due to them respectively for all labor, work and services done, performed or rendered within two months next preceding the date when proceedings in insolvency shall be actually instituted and begun against such insolvent corporation.

P. L. 1849, p. 309; Act of 1875, § 63; P. L. 1887, p. 99; P. L. 1892, P. 426.

The president is not entitled to a lien for services as president; he is a member of the corporation and cannot be both employer and employee. The word laborers includes "all persons doing labor or service of what"ever character for or as workmen or employees in the regular employ of "such corporation." (England's Executors v. Beatty Organ Co., 41 N. J. Eq., 470.) The corresponding section of the Act of 1875 was amended in 1887. Another act was passed in 1892 which was held by the courts to supersede the prior section, although not expressly repealing it.

(Mersereau v. Mersereau Co., 51 N. J. Eq., 382) The present section is substantially the same as the Act of 1892. Under the Act of 1892 it was held that a bookkeeper, although a director, in the regular employ of a corporation, was entitled to the lien given by the statute. (Consolidated Coal Co. v. Keystone Chemical Co., 54 N. J. Eq., 309.)

In Fitzgerald v. Maxim Powder Mfg. Co. (35 Atl. Rep., 1064) the word "assets" was construed to include the entire assets or property of the corporation which came to the receiver for administration, whether incumbered by previous liens or not, with certain exceptions (which are set forth in the next section). It was held, therefore, that the lien of laborers was prior to the lien of a judgment entered before the insolvency of the company.

The right of preference is statutory and does not vest until the happening of the statutory requirements. It is created only when insolvency proceedings are begun and then arises in favor of those persons and for such amounts and under such conditions as the legislation on the subject then in force may prescribe. It was held that employees acquired no vested right by virtue of the Acts of 1875 and 1887, such acts being superseded by the Act of 1892. The law recognizes no distinction between apprentices and other employees; the rule in Bedford v. Newark Machine Co (16 N. J. Eq., 121) has been changed by statute. (Mingin v. Alva Glass Mfg. Co., 37 Atl., 458.)

This section being in derogation of the common right of creditors of the same class to be paid equally must be construed strictly. And the right conferred by it is held to be personal, inhering in the person alone who actually performs labor or services. (Lehigh Coal & Nav. Co. v. C. R. R. of N. 7., 29 N. J. Eq., 252.)

84. Such lien shall be prior to all other liens that can or may be acquired upon or against such assets, except the lien and incumbrance of a chattel mortgage, recorded more than two months next preceding the date when proceedings in insolvency shall have been actually instituted against such insolvent corporation, and except the lien and incumbrance of a chatte mortgage recorded within two months next preceding the date when proceedings in insolvency shall have been actually instituted against such insolvent corporation, for money loaned or for goods purchased within said period of two months; and also except as against the lien of mortgages given upon the lands and real estate of such insolvent corporation.

P. L. 1849, p. 309; Act of 1875, § 63; P. L. 1887, p. 99; P. L. 1892, P. 426.

This section defines and limits the only liens which are allowed to take preference over the lien of laborers.

§ 84

§ 85-87

85. Compensation of receivers.-Before distribution of the assets of an insolvent corporation among the creditors or stockholders the court of chancery shall allow a reasonable compensation to the receiver for his services and the costs and expenses of the administration of his trust, and the costs of the proceedings in said court, to be first paid out of said assets.

$6. Distribution; how made.-After payment of all allowances, expenses and costs. and the satisfaction of all special and general liens upon the funds of the corporation to the extent of their lawful priority, the creditors shall be paid proportionally to the amount of their respective debts, excepting mortgage and judgment creditors when the judgment has not been by confession for the purpose of preferring creditors; and the creditors shall be entitled to distribution on debts not due, making in such case a rebate of interest, when interest is not accruing on the same; and the surplus funds, if any, after payment of the creditors and the costs, expenses and allowances aforesaid, and the preferred stockholders, shall be divided and paid to the general stockholders proportionally, according to their respective shares. P. L. 1829, p. 63; Act of 1875, $ 80; P. L. 1877, p. 74.

Both mortgage and judgment creditors are preferred only so far as they have acquired liens. Under the Act of 1875 and until 1895 there was a distinction between mortgages for the purpose of preferring creditors and judgments confessed for the same purpose. The former were not prohibited, the latter were. (Doane v. Millville Ins Co., 45 N. J. Eq., 274, 282; Whittaker v. Amwell Natl. Bank, 52 N. J. Eq., 400, 414.)

Under the Revision of 1896 no preferences whatever can be made by an insolvent corporation. (See Section 64, p. 79, ante.)

The franchise tax is a preferred debt in case of insolvency. (Section 205, p. 118, post.) With this exception New Jersey does not possess the crown's common law prerogative to have its debts paid in preference to the debts of other creditors. (Freeholders of Middlesex Co. v. State Bank, 29 N. J. Eq., 268; aff'd 30 N. J. Eq., 311; see also Evans v. Walsh, 41 N. J. Law, 281.)

VIII.-Service of Process.

87. Process against corporations of this state. In any personal action commenced against a corporation in any of the courts of law of this state, the first process to be made use of may be a summons, a copy whereof shall be served on the president, or other head officer or agent in charge of its principal office in this state, or left at his dwelling-house or usual place of abode, at least six days before its return; and in case the president or other

head officer or agent cannot be found to be served with process, §87a and has no dwelling-house, or usual place of abode within this state, a copy of the summons shall be served on the clerk or secretary of the corporation, if any there be, and if no clerk or secretary, then on one of its directors, or left at his dwelling-house, or usual place of abode, six days before its return.

P. L. 1865, p. 467; Act of 1875, $$ 87-88.

Sections 87 and 88 relate to the service of process in personal actions, where the fruits of the litigation are secured by a common law judgment to be executed upon the property of the defendants. They do not apply to proceedings under prerogative writs (mandamus, &c.), which are enforceable only by attachment for contempt in disobeying the commands of the court. (Freeholders of Mercer v. Penna. R. R. Co., 41 N. J. Liw, 25.) A writ of mandamus should be directed either to the corporation or to the select body within the corporation, whose province and duty it is to perform the particular act, or to put the necessary machinery in motion to secure its performance, and the return must be made by those to whom the writ was directed (Id.).

But service of such writs may be made on foreign corporations by serving on an officer or agent as prescribed by Sections 102 and 103, post.

Sections 87 and 88 refer to the mode of serving process in the higher courts, and not when issued by justices of the peace. Such process must be served in the manner prescribed by the Small Causes Act. (D. L. & W. R. R. Co. v. Ditton, 36 N. J. Law, 361; Wheeler & Wilson Mfg. Co. v. Carty, 53 N. J. Law, 336; Gen. Stat., p. 1865, § 18.)

Section 87 prescribes the manner in which a summons may be served, and has no application beyond the first process in the cause. As to subsequent process "everything must depend upon the circumstances of "each particular case, having regard to the purposes for which the cor"poration was created, and the nature of the duties of the person on whom "service is made, either in his official capacity, or by the usages of the "company. The principle is, that it must be made upon some person upon "whom the duty devolves by virtue of his official position, or of his cm"ployment, to communicate the fact of service to the governing power in 'the corporation. A service on such a person is a service on the cor"poration." (Dock v. Elizabethtown Steam Mfg. Co., 34 N. J. Law, 312, 318; Facts Pub. Co. v. Felton, 52 N. J. Law, 161. But see Norton v. Berlin Iron Bridge Co., 51 N. J. Law, 442.)

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87a. Service of declaration on corporation.-That the service. of a copy of the declaration may be made by delivering the same to the defendant personally, or by leaving it at his dwelling-house or last place of abode; and where the defendant is a corporation, service may be made by delivering