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§ 66 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 Assn., 56 N. J. Eq., 244.)

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. 1828, pp. 60, 61, 62; Act of 1875, §§ 72, 77.

An officer of a corporation, under whose management it became insolvent, is not a proper person to be appointed receiver. The Court of

Chancery may remove a receiver for cause. When an officer of a corporation has been appointed its receiver, and it appears proper that his conduct as such officer should be investigated to ascertain whether he has not obtained an advantage which he ought not to be permitted to retain. sufficient cause for removal exists. (McCullough v. Merchants' Loan & Trust Co., 29 N. J. Eq., 217.)

In what courts receiver must bring suit.-The receiver gets no power to sue in equity merely because he is an officer appointed by and amenable to the directions of the Court of Chancery. He must collect legal claims through the legal tribunals and enforce equitable rights of the insolvent company through courts of equity. (Riley v. Clarendon Oil & Refining Co., 20 N. J. L. J., 246.)

67. Receiver to qualify and take oath.

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Every receiver shall before acting enter into such bond and comply with such terms as the court may prescribe, and take and subscribe the following oath or affirmation: "I, swear (or affirm) that I will faithfully, honestly and impartially execute the powers and trusts reposed in me as receiver, for the creditors and stockholders of the and that without

favor or affection," which oath or affirmation shall be filed in the office of the clerk in chancery within ten days after the taking thereof.

P. L. 1828, p. 61; Act of 1875, § 73.

68. Property, franchises, etc., of insolvent corporation vests in receiver upon appointment.

All the real and personal property of an insolvent corporation, wheresoever situated, and all its franchises, rights, privileges and effects shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto.

P. L. 1828, p. 61.

This section was intended to settle the question as to whether the property of an insolvent company vests in the receiver. Willink v. Morris Canal & Banking Co. (4 N. J. Eq., 377) held that it did not; that the title to the property is not changed by the appointment, and that a power only is delegated to the receivers to take charge of it and sell it. Corrigan v. Trenton Del. Falls Co. (7 N. J. Eq., 489, 496), held that the statute, and the appointment of receivers under it, are a convey

§ 67-68

69 ance or transfer of all the property of the insolvent company to the receivers for the benefit of the creditors of the company, to be distributed in the mode pointed out by the statute. To the same effect, Freeholders of Middlesex v. State Bank (29 N. J. Eq., 268, 274) and Minchin v. Second Natl. Bank (36 N. J. Eq., 436, 442). In Receiver v. First Natl. Bank (34 N. J. Eq., 450, 456) the contrary view is expressed by ViceChancellor Van Fleet, who states that the decision of Chancellor Halsted was made in ignorance of the prior decision in Willink v. Morris Canal & Banking Co. (4 N. J. Eq., 377.) And to the same effect is Kirkpatrick v. Corning (37 N. J. Eq., 54, 59).

The question seems settled by this and the succeeding section.

Under this section assessment calls may properly be made by the receiver rather than by the court itself. He should give thirty days' notice as required by Section 22. (Falk v. Whitman Cigar Co., 36 Atl. Rep., 1094; Meley v. Whitaker, 61 N. J. Law, 602; see also Thompson on Corporations, Sections 2003, 2004.)

A receiver of an insolvent corporation may enjoin the prosecution of a pending action commenced against the corporation by a creditor thereof, prior to the commencement of the insolvency proceedings in view of the statute vesting all the corporation's assets in the receiver. (Morton v. Stone Harbor Imp. Co., 44 Atl. Rep., 875.)

Lien of execution.-If the personal property of a corporation has become bound by the delivery of a writ of execution to the sheriff, or if the judgment creditor elects to satisfy his execution out of debts under Section 62 of the Corporation Act, before the commencement of insolvency proceedings, the rights thus created will not be disturbed. (Van Steenberg v. Parsell Pearl Button Co., 19 N. J. L. J., 149. See also Van Waggoner v. Moses, 26 N. J. Law, 570.)

69. When debts paid or provided for, court may direct receiver to reconvey property, or may dissolve corporation.

Whenever a receiver shall have been appointed as aforesaid and it shall afterwards appear that the debts of the corporation have been paid or provided for, and that there remains or can be obtained by further contributions sufficient capital to enable it to resume its business, the court of chancery may, in its discretion, a proper case being shown, direct the receiver to reconvey to the corporation all its property, franchises, rights and effects, and thereafter the corporation may resume control of and enjoy the same as fully as if the receiver had never been appointed; and in every case in which the court of chancery shall not direct such reconveyance, said court may, in its discretion, make a decree

dissolving the corporation and declaring its charter forfeited and § 70-71

void.

70. Upon reorganization company may issue bonds and stock to creditors.

Whenever a majority in interest of the stockholders of such corporation shall have agreed upon a plan for the reorganization of the corporation and a resumption by it of the management and control of its property and business, such corporation may, with the consent of the court of chancery, upon the reconveyance to it of its property and franchises, mortgage the same for such amount as may be necessary for the purposes of such reorganization; and may issue bonds or other evidences of indebtedness, or additional stock, or both, and use the same for the full or partial payment of the creditors who will accept the same, or otherwise dispose of the same for the purposes of the reorganization.

P. L. 1882, p. 167.

71. Power of receiver to examine witnesses, etc.

Such receiver shall have power to send for persons and papers and to examine any persons, including the creditors and claimants, and the president, directors and other officers and agents of the corporation, on oath or affirmation (which oath or affirmation the receiver may administer), respecting its affairs and transactions and its estate, money, goods, chattels, credits, notes, bills and choses in action, real and personal estate and effects of every kind, and also respecting its debts, obligations, contracts and liabilities, and the claims against it; and if any person shall refuse to be sworn or affirmed, or to make answers to such questions as shall be put to him, or refuse to declare the whole truth touching the subject-matter of the said examination, the court of chancery may, on report by the receiver, commit such person to prison, there to remain until he shall submit himself to be examined, and pay all the costs of the proceedings against him.

Act of 1875, § 74.

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Such receiver, with the assistance of a peace officer, may break open, in the daytime, the houses, shops, warehouses, doors, trunks, chests, or other places of the corporation where any of its goods, chattels, choses in action, notes, bills, moneys, books, papers or other writings or effects, have been usually kept, or shall be, and take possession of the same, and of the lands and tenements belonging to the corporation.

Act of 1875, § 75.

73. Acts of majority of receivers or trustees valid; receivers may be removed and others appointed.

Every matter and thing by this act required to be done by receivers or trustees shall be good and effectual, to all intents and purposes, if performed by a majority of them; and the court of chancery may remove any receiver or trustee, and appoint another or others in his place or fill any vacancy which may occur.

P. L. 1828, p. 63; Act of 1875, § 79.

74. Inventory and report.

Such receiver, as soon as convenient, shall lay before the court of chancery a full and complete inventory of all the estate, property and effects of the corporation, its nature and probable value, and an account of all debts due from and to it, as nearly as the same can be ascertained, and make a report to the court of his proceedings every six months thereafter during the continuance of the trust.

P. L. 1828, p. 62; Act of 1875, § 76.

75. Court may limit time to present and make proof of claims.

The court of chancery may limit the time within which creditors shall present and make proof to such receiver of their respective claims against the corporation, and may bar all creditors and claimants failing so to do within the time limited from participating in the distribution of the assets of the corporation; the court may also prescribe what notice, by publication or otherwise, shall be given to creditors of such limitation of time.

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