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§ 78-79 all cases in which no trial by jury shall be demanded the court. of chancery shall have jurisdiction to pass upon the claims presented and to determine the rights of the claimants, and to make such order or decree touching the same as shall be equitable and just.

P. L. 1829, p. 62; Act of 1875, § 78.

78. Persons aggrieved by proceedings may appeal to Court of Chancery.-Every such insolvent corporation, or any person aggrieved by the proceedings or determination of such receiver in the discharge of his duty, may appeal to the court of chancery, which court shall, in a summary way, hear and determine the matter complained of, and make such order touching the same as shall be equitable and just

P. L. 1829, p. 63; Act of 1875, § 82.

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The language of the seventieth section of this act [which Section 78 " of the Revision of 1896 practically restates] is very comprehensive, and "would seem to have been adopted for the purpose of embracing every ' question which could possibly be brought before the receivers for their "action, and by which action any person could complain of being 'aggrieved." (Jackson v. People's Bank, 9 N. J. Eq., 205.)

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This provision of the Corporation Act is not technical. Relief may be given under an original bill or by way of cross-bill, or in any proceeding by which jurisdiction may be secured. If after the receiver's determination a new element comes into the controversy, it is not necessary to present the same to the receiver before appealing to the court for adjudication. (Gray v. Taylor, 44 Atl. Rep., 668.)

In Leo v. Green (52 N. J. Eq., 1) the Chancellor held that a delay for 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, be 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 § 80-82 against a receiver of a corporation shall abate by reason of his death, but, upon suggestions 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.)

To vest jurisdiction in the Court of Chancery two jurisdictional facts must appear: First, that the prior incumbrances are disputed; secondly, that the property is of such a character that it will materially deteriorate in value pending the litigation. (Reilly v. Penn Cordage Co., 58 N. J. Eq., 459.)

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

§ 83 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.

Section 83 refers exclusively to natural persons, and not to corporations. (In re Barr-Dunwiddie Printing & Bookbinding Co., 42 Atl. Rep., 575.)

The lien covers only assets in the receiver's hands. (Hinkle v. Camden Safe Dep. & Tr. Co., 47 N. J. Eq., 333.)

Such lien is not prior to that of a mortgagee, whose mortgage was executed and recorded before the services were rendered. (Hinkle v. Camden Safe Dep. & Tr. Co., 47 N. J. Eq., 333.)

The person who furnishes the labor or services of others under a contract to do the whole business of a corporation, or a particular branch of it, is not an employee, but a contractor, and has no lien by virtue of Section 83. (Lehigh Coal & Navigation Co. v. Central R. R. of N. J., 29 N. J. Eq., 252.)

A superintendent of the work of constructing a railroad voluntarily advanced his own money to pay the workmen for their work, supposing the company to be solvent. The company was afterwards adjudged insolvent. In the absence of an assignment of the claims of the workmen to him, or any agreement that he should have the benefit of their liens, it was held that he was not by subrogation entitled to the workmen's statutory liens for such payments. (North River Construction Company's Case, 38 N. J. Eq., 433.)

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The president is not entitled to a lien for services as president; he is § 84 a member of the corporation and cannot be both employer and employee. The word laborers includes all persons doing labor or service of whatever 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.)

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In Fitzgerald v. Maxim Powder Mfg. Co. (33 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. Rep., 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. J., 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 chattel 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

§ 85-86 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.

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.

Receiver's allowances and his expenses in winding up the company are entitled to preference over State franchise taxes. (Chesapeake & Ohio Ry. Co. v. Atlantic Transportation Co., Court of Errors and Appeals, March 11, 1901.

86. 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, ante.)

The franchise tax is a preferred debt in case of insolvency. (Section 153, 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.)

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