As to the jurisdiction of the United States Courts to appoint a receiver, see Hollins v. Brierfield Coal and Iron Co., 150 U. S., 371.

This section creates a right which may be enforced by a suit in a federal court and such court will follow its own procedure in granting relief. Land Title & Trust Co. v. Asphalt Co. of America, 127 Fed. Rep., 1.

Nature of proceeding.

The nature of the proceeding under these sections and the practice is discussed in Albert v. Clarendon Land, etc., Co., 53 N. J. Eq., 623, 625; Cape May v. Cape May, etc., R. R. Co., 59 Id., 59; Gallagher v. Asphalt Co., 65 N. J. Eq., 258, and 67 N. J. Eq., 441; Pierce v. Old Dominion Copper Co., 67 N. J. Eq., 399; s. c. 72 N. J. Eq., 595; aff'd 70 Atl. Rep., 1101.

The limitations upon the use of affidavits and particularly under rule 122 on the argument of motions for an injunction are not applicable to the summary method provided in these sections. If either party is dissatisfied with the decrees in this summary proceeding, his remedy is by appeal to the Court of Errors and Appeals. Pierce v. Old Dominion Copper Co., supra.

To entitle a stockholder to action under this section he must be the actual owner of stock. Hoopes v. Basic Co., 69 N. J. Eq., 679; aff'd 72 Id., 426; Iserman v. International Stoker Co., 72 N. J. Eq., 708.

The final decree is the decree for an injunction, which virtually destroys the corporation like a judgment of ouster in quo warranto proceedings. The order appointing a receiver may be embodied in the final decree or may be made subsequently. Pierce v. Old Dominion Copper Co., supra.

Effect of appointment of receiver.

The appointment of a receiver does not work a dissolution of the corporation. Corporate liabilities, rights and duties remain and the corporate affairs are managed by the receiver. Kirkpatrick v. Assessors, 57 N. J. Law, 53; N. J. Southern R. R. Co. v. R. R. Commissioners, 41 N. J. Law, 235. As to creditors, Graham Button Co. v. Spielman, 50 N. J. Eq., 120; aff'd p. 796.

A corporation which has been declared insolvent has power to take steps looking toward a reorganization and a resumption of its property and business pending an injunction and receivership, and may employ agents to aid in the carrying out of such purposes, for whose compensation it will be liable if the injunction is dissolved and the receiver removed. Linn v. Joseph Dixon Crucible Co., 59 N. J. Law, 28.

A corporation in the hands of a receiver can legally hold an election for directors, and the court may order such election. Lehigh Coal & Navigation Co. v. Central R. R. Co. of N. J., 5 N. J. L. J., 214.

See Nicholson v. Wheeling, etc., R. R. Co., 110 Fed. Rep., 105; Fleming v. Fleming Hotel Co., 69 N. J. Eq., 715.

Receivers' certificates.

As to the purposes for which receivers' certificates may be issued and their priority over other liens, see Lockport Felt Co. v. United Box Board & Paper Co., 70 Atl. Rep., 980.

Petition to vacate appointment.

After a receiver was appointed the defendant filed a petition setting up new facts and praying that the appointment of a receiver be vacated; held, that it was not necessary to file a bill in the nature of a bill of review to obtain the relief asked for in the petition. A bill of review is necessary only after final decree. Franklin Electric Light Co. v. Fort Wayne Electric Corporation, 58 N. J. Eq., 543.

Conflict of laws.

A New York corporation, in contemplation of insolvency, gave a mortgage on lands located in New Jersey to citizens of New Jersey. The general laws of New York forbade a mortgage by a company in contemplation of insolvency. Held, that although the company brought with it to New Jersey its charter powers, it did not bring the general laws of the State of New York; that it had power in its charter and under New Jersey laws to mortgage its property, and that the general laws of New York had no effect to restrain its action. Boehme v. Rall, 51 N. J. Eq., 541.

Powers of receiver.

The receiver must take charge of all the property and so manage and preserve it as to enable it to be disposed of most advantageously. In the case of ordinary corporations the duty can be fully performed by merely storing, insuring and otherwise guarding the property and preserving its value until a sale can be judicially made. Ordinarily there is no necessity or advantage in continuing the business and an early conversion of the assets into money, and its distribution among creditors is the plan of wisdom. Vanderbilt v. Central R. R. Co., 43 N. J. Eq., 669.

The receiver is the representative of creditors, but he is also the representative of the corporation and the stockholders. He may therefore sue the directors who have diverted the assets of a company to themselves or to a company of which they are the sole stockholders. Landis v. Hotel Co., 53 N. J. Eq., 654, distinguished. Hayes v. Pierson, 65 N. J. Eq., 353.

There are two classes of insolvent corporations: (1) those of public character; (2) mere private enterprises. In the former class the franchise is kept alive by the receiver and sold. In the latter class no duty devolves upon the receiver to care for the franchise. He will

pay the franchise tax only so long as he uses the franchise.

He can

not sell the franchise. In re Mather's Sons' Company, 52 N. J. Eq., 607.

On principles of comity the receiver of a foreign corporation may seek the aid of the courts of this state to preserve the property here against the fraudulent acts of the officers. Bidlock v. Mason, 26 N. J. Eq., 230.

A receiver has power to adjust by agreements rights of claimants under the mechanics' lien law, although the claims have been merely filed. Demott v. Stockton Paper Mfg. Co., 32 N. J. Eq., 124.

The receiver represents both the corporation and its creditors and is intrusted with the rights and powers of both. Runyon v. Farmers & Mech. Bank, 4 N. J. Eq., 480; National Trust Co. v. Miller, 33 N. J. Eq., 155, 158; Receiver v. Spielmann, 50 N. J. Eq., 120; aff'd Id., 796; Hopper v. Lovejoy, 47 N. J. Eq., 573; Hood v. McNaughton, 54 N. J. Law, 425; Barkalow v. Totten, 53 N. J. Eq., 573; Falk v. Whitman Cigar Co., 55 N. J. Eq., 396; Bennett v. Keen, 59 N. J. Eq., 634; Vanderbilt v. Central R. R. Co., 43 N. J. Eq., 669; Una v. Newark Savings Inst., 46 Atl. Rep., 660; Hendrickson v. Dwyer, 70 N. J. Law, 223; Cunningham v Alryan Woolen Mills, 69 N. J. Eq., 710; Lockport Felt Co. v. United Box Board & Paper Co., 70 Atl. Rep., 980; Mills v. Hendershot, 70 N. J. Eq., 258.

Creditor defined.

The word "creditor" as used in the statute is applied in a broad sense. If a party can come in as a claimant and prove that he is entitled to a share in what is to be divided, it is generally true that he is a creditor. Gallagher v. Asphalt Co., 65 N. J. Eq., 258; Rosenbaum v. U. S. Credit System Co., 61 N. J. Law, 543; Fort Wayne Electric Co. v. Franklin Electric Light Co., 57 N. J. Eq., 16; Spader v. Mural Decorating Mfg. Co., 47 N. J. Eq., 18; Bolles v. Crescent Drug Co., 53 N. J. Eq., 615; New Jersey Ins. Co. v. Meeker, 37 N. J. Law, 282. Receiver of solvent corporation; when appointed.

The court, in Sternberg v. Wolff, 56 N. J. Eq., 389, held, that when, by reason of dissensions among the directors of a trading corporation, there is a deadlock in the management of its business by them, a receiver pendente lite may be appointed. See also Archer v. American Water Works, 50 N. J. Eq., 33; Fougeray v. Cord, 50 N. J. Eq., 185, 756; Edison v. Edison United Phonograph Co., 52 N. J. Eq., 620, 625, 626.

When Sternberg v. Wolff came back to the Court of Chancery, notwithstanding the opinion of the Court of Appeals, it refused to appoint a receiver, holding that the Court of Chancery ought not to interfere with the business of a solvent corporation by the appointment of a receiver unless there is a present danger to the interests of the stockholders, consisting of a serious suspension or

interference with the conduct of the business, and a threatened depreciation of the value of assets consequent thereon, which may be met and remedied by a receiver. In other words, it must appear that the appointment of a receiver would serve some beneficial purpose to the stockholders. Sternberg v. Wolff, 56 N. J. Eq., 555. See also Hayes v. Pierson, 65 N. J. Eq., 353.

Where it appears that the corporation is not insolvent and that a receiver was appointed at the instance of less than one-quarter of the stock, the receiver will be discharged. Stokes v. Knickerbocker Investment Co., 70 N. J. Eq., 518.

Receivers of foreign corporations.

The court may take jurisdiction in every case where it is made to appear that the corporation has done business here, and still has property here, although at the time when the bill or petition was filed its business here is entirely suspended. Albert v. Clarendon Land, etc., Co., 53 N. J. Eq., 623, 626.

The Court of Chancery will not appoint a receiver for a foreign corporation on a mere suspicion that it is about to remove its property to another state, or intends to commit a fraud, when it is not shown to have been declared insolvent by the courts of the state of its creation. Smyth v. Empire Rubber Co., 2 N. J. L. J., 154.

Whether, after a foreign corporation doing business in this state has passed into the hands of a receiver in the state of its domicile, a receiver will be appointed in this state, and, if so, whether the domiciliary receiver will be appointed here, will depend upon the volume and kind of business done in this state, and whether any special interest of the creditors or citizens in this state is likely to be involved in the settlement of the insolvent's affairs. The receiver in this state is amenable alone to the direction of this court, and not to the direction of the domiciliary receiver. Irwin v. Granite State Provident Ass'n, 56 N. J. Eq., 244.

Preliminary injunction; solvent corporation.

The rule as to the granting of a preliminary injunction is discussed in Harriman v. Northern Securities Co., 132 Fed. Rep., 464.

66. Court may appoint receivers; powers of receivers.

The court of chancery, at the time of ordering said injunction, or at any time afterwards, may appoint a receiver or receivers or trustees for the creditors and stockholders of the corporation, with full power and authority to demand, sue for, collect, receive and

take into their possession all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, papers, choses in action, bills, notes and property of every description of the corporation, and to institute suits at law or in equity for the recovery of any estate, property, damages or demands existing in favor of the corporation, and in his or their discretion to compound and settle with any debtor or creditor of the corporation, or with persons having possession of its property or in any way responsible at law or in equity to the corporation at the time of its insolvency or suspension of business, or afterwards, upon such terms and in such manner as he or they shall deem just and beneficial to the corporation, and in case of mutual dealings between the corporation and any person to allow just set-offs in favor of such person in all cases in which the same ought to be allowed according to law and equity; a debtor who shall have in good faith paid his debt to the corporation without notice of its insolvency or suspension of business, shall not be liable therefor, and the receiver or receivers or trustees shall have power to sell, convey and assign all the said estate, rights and interests, and shall hold and dispose of the proceeds thereof under the directions of the Court of Chancery; the word receiver as used in this act shall be construed to include receivers and trustees appointed as provided in this act.

P. L. 1829, pp. 60, 61, 62; Act of 1875, §§72, 77.

Where directors and officers, pending an application for a receiver on the ground of insolvency alleged to have been caused by their wrongdoing, passed a resolution recommending the dissolution and liquidation of a building and loan association and indirectly procured the appointment by the shareholders of three certain trustees in liquidation, it was the duty of the court, insolvency being shown, forthwith to remove the trustees and appoint a receiver, who neither by his official participation in the affairs of the