a motion for leave to amend the bill,11 unless indeed the proposed amendment would change materially the allegations showing the necessity for a receiver. The bill should lay the foundation for the appointment by stating the facts which show its necessity and propriety,12 and should contain a prayer for a receiver.13 If, however, a state of facts subsequently arise making the appointment necessary, it may probably be made without an amendment of the original or the filing of a supplemental bill.14 The application for a receiver should be supported by evidence showing that the appointment is necessary.15 If the application is made before decree, the affidavits should be founded upon the allegations in the bill.16 If statements not founded on allegations in the bill and alleging facts which existed and were known before the bill was filed, are introduced into the affidavits, it seems that the court will not consider them; and even if, where the case made by the bill fails, sufficient ground for a receiver is confessed in the answer, it seems that a receiver would be denied the plaintiff, at least until he had amended his bill.18 After an application for a receiver has been once denied, a second application supported by the same papers will rarely be granted.19 The former rule was that, after answer, a plaintiff when moving for a receiver could only rely upon the admissions in the answer; 20 but now a sworn answer is given upon such a motion little more effect than an ordinary affidavit, and may be contradicted by affidavits in support of the bill.21 The appointment is usually only made upon notice, and is very rarely granted ex parte.22 Less than one day's notice has been held to be insufficient.23 A receiver may, 11 Barnard v. Darling, 1 Barb. Ch. (N. Y.) 76. 12 Tomlinson v. Ward, 2 Conn. 396; Verplanck v. Mercantile Ins. Co., 2 Paige (N. Y.), 438. But see Hottenstein v. Conrad, 9 Kan. 435. 18 Cremen v. Hawkes, 2 Jones & LaT. 674; Kerr on Receivers (2d Am. ed.), 154. 19 Fenton v. Lumberman's Bank, Clarke Ch. (N. Y.) 360. 20 Daniell's Ch. Pr.(2d Am. ed.) 1976. 13 Rule 21. But see Osborne v. Harvey, See Goodman v. Whitcomb, 1 J. & W. 1 Y. & C. N. R. 116. 14 Malcolm v. Montgomery, 2 Molloy, 500; Hottenstein v. Conrad, 9 Kan. 435. 15 Middleton v. Dodswell, 13 Ves. 266; Kerr on Receivers (2d Am. ed.), 154. 16 Dawson v. Yates, 1 Beav. 301, 306; Cremen v. Hawkes, 2 Jones & LaT. 674; Kerr on Receivers (2d Am. ed.), 154. 17 Dawson v. Yates, 1 Beav. 301, 306; Kerr on Receivers (2d Am. ed.), 154. 589; Kershaw v. Mathews, 1 Russ. 361. 22 Blondheim v. Moore, 11 Md. 365; 23 St. Louis, K. C. & C. Ry. Co., v. Dewees, 23 Fed. R. 691. however, be appointed ex parte, if that is the only way to preserve the property from destruction or serious injury, or removal beyond the jurisdiction of the court.24 It has been said that a receiver of the assets of a railroad company will rarely be appointed in a suit to which no stockholders or bondholders are actually parties.25 Where the officer of a corporation who had been served with notice of a motion for the appointment of a receiver fraudulently concealed that fact from his associates, and did not oppose the motion, although no collusion with the plaintiff was shown, a motion to vacate the appointment was entertained.26 A delay of one month after knowledge of the appointment of a receiver, who had expended in the improvement of the property money furnished him by others, was held such acquiescence as to estop a party from moving to vacate the order of appointment for irregularity because granted without notice to him.27 Except in an extraordinary case, a receiver will not be appointed over property in the possession of a stranger to the suit.28 § 253. Who may apply for the Appointment of a Receiver. — A receiver is usually appointed upon the application of the plaintiff. Before a decree it seems that one defendant cannot move for a receiver, unless he has filed a cross-bill praying for one.2 After a decree, however, he may, in a proper case, obtain a receiver of the property of a co-defendant upon petition, but not usually over the property of the plaintiff without a cross-bill.4 § 254. Manner of the Appointment of a Receiver. By the English practice, which was followed in New York before the passage of statutes altering it, when an application for the appointment of a receiver was granted, the selection of the receiver was re 24 Gibson v. Martin, 8 Paige (N. Y.),"'" 481; Johns v. Johns, 23 Ga. 31; Triebert v. Burgess, 11 Md. 452; Gibbons v. Mainwaring, 9 Simons, 77; Miltenberger v. Logansport Ry. Co., 106 U. S. 286. 25 Overton v. Memphis & L. R. R. Co., 10 Fed. R. 866. But see Central Trust Co. v. Texas & St. L. Ry. Co., 24 Fed. R. 153. 26 Allen v. The Dallas & Wichita R. R. Co., 3 Woods, 316. 27 Allen v. The Dallas & Wichita R. R. Co., 3 Woods, 316. 28 Searles v. The Jacksonville, Pensacola, & Mobile R. R. Co., 2 Woods, 621. See also Davis v. Gray, 16 Wall. 203, 218. § 253. 1 Robinson v. Hadley, 11 Beav. 614; Leddel's Ex'r v. Starr, 19 N. J. Eq. (4 C. E. Green) 159. But see Sargant v. Read, L. R. 1 Ch. D. 600; Henshaw v. Wells, 9 Humph. (Tenn.) 568. 2 Grote v. Bury, 1 W. R. 92; Robinson v. Hadley, 11 Beav. 614; Kerr on Receivers (2d Am. ed.), 153, 154. 8 Barlow v. Gains, 8 Beav. 329; Hiles v. Moore, 15 Beav. 175; Kerr on Receivers (2d Am. ed.), 154. 4 Grote v. Bury, 1 W. R. 92; Robinson v. Hadley, 11 Beav. 614; Kerr on Receivers (2d Am. ed.), 153, 154. ferred to a master in chancery, whose action was subject to the confirmation of the court. The same master usually exercised supervision over contracts made by the receiver and the adjustment of his compensation.2 In the Federal courts, however, it is the customary practice for the judge to appoint and often to supervise a receiver himself, without the aid of a master, except when the accounts are passed.3 § 255. Who should be appointed Receiver. - As a general rule no one should be appointed receiver of property who has any interest therein, or is in any way connected with the litigation in the course of which the appointment is made, or is nearly related to, or is in the employ of any of the parties thereto, or who, if he should receive the appointment, would occupy two inconsistent positions; nor a person who is not familiar with the management of similar property, and able to give sufficient attention to the management of his trust. Thus a stockholder,8 officer, or director of a corporation will very rarely be appointed a receiver of its assets; nor a party,10 or solicitor," or the son or brother of a party 12 to a cause, over property which is the subject of the litigation. Nor should the next friend of an infant, whose duty it is to protect his interest, be appointed receiver § 254. 1 Creuze v. Bishop of London, Dickens, 687; Thomas v. Dawkin, 1 Ves. Jr. 452; In re Eagle Iron Works, 8 Paige (N. Y.), 385; High on Receivers, § 90; Daniell's Ch. Pr. (2d Am. ed.) 1976. 2 Thornhill v. Thornhill, 14 Simons, 600. 3 Miltenberger v. Logansport Ry. Co., 106 U. S. 286; Buck v. Piedmont & Arlington Life Ins. Co., 4 Fed. R. 849; Frank v. Denver & R. G. Ry. Co., 23 Fed. R. 757. But see Taylor v. Phila. & Reading R. R. Co., 7 Fed. R. 379; s. c. 9 Fed. R. 1; Cowdrey v. Railroad Co., 1 Woods, 331, 341. § 255. 1 Wiswell v. Starr, 48 Me. 401. 2 Baker v. Backus, 32 Ill. 79; Garland v. Garland, 2 Ves. Jr. 137. 484. 6 Lupton v. Stephenson, 11 Ir. Eq. 7 Wynne v. Lord Newborough, 15 Ves. 283; Gibbs v. David, L. R. 20 Eq. 373. 8 Wiswell v. Starr, 48 Me. 401; Atkins v. Wabash, St. L. & P. Ry. Co., 29 Fed. R. 161. 9 Attorney-Goneral v. Bank of Columbia, 1 Paige (N. Y.), 511; Buck v. Piedmont & Arlington Life Ins. Co., 4 Fed. R. 849; Atkins v. Wabash, St. L. & P. Ry. Co., 29 Fed. R. 161; Baker v. Backus, 32 Ill. 79; Finance Co. of Pa. v. Charleston C. & S. C. R. Co., 45 Fed. R. 436. 10 Wilson v. Greenwood, 1 Swanst. 471; Finance Co. of Pa. v. Charleston C. & S. C. R. Co. 45 Fed. 436. 11 Baker v. Backus, 32 Ill. 79; Garland 3 Williamson v. Wilson, 1 Bland (Md.), v. Garland, 2 Ves. Jr. 137; Finance Co. 418. 4 Baker v. Backus, 32 Ill. 79; Attorney-General v. Bank of Columbia, 1 Paige (N. Y.), 511; Buck v. Piedmont & Arlington Life Ins. Co., 4 Fed. R. 849. Stone v. Wishart, 2 Madd. 64; Ex parte Fletcher, 6 Ves. 427. of Pa. v. Charleston C. & S. C. R. Co., 45 Fed. R. 436. 12 Williamson v. Wilson, 1 Bland (Md.), 418: Taylor v. Oldham, Jac. 527. But see Shainwald v. Lewis, 8 Fed. R. 878. over his estate; 13 nor an active trustee over the trust estate,14 although a mere dry trustee may be thus appointed.15 Nor should a master in chancery, whose duty it is to pass receivers' accounts, be appointed a receiver; 16 nor should a solicitor who does not understand the management of machinery be appointed receiver over a manufacturing establishment.17 Nor should a person be appointed receiver who lives at a great distance from the estate over which a receiver is desired, and is actively engaged in another employment.18 It has also been said in England, "that the receiver-general of taxes for a county cannot be appointed a receiver; for having given, as such, security to the crown, if he were to become indebted to the crown and to the estate, the crown might, by its prerogative process, sweep away all his property." "19 And Lord Eldon held that a peer could not be a receiver, because, "in many instances, a receiver may be committed." 20 The court may, however, under very special circumstances appoint as receiver a trustee,21 or a person interested in the subject of the suit,22 or even a party to the suit,23 or his near relation.24 This, however, will rarely be done unless by consent, or possibly when it clearly appears to be for the interest of all concerned; 25 and in such a case the receiver is usually obliged to act without compensation if he accepts the trust. When a party to the cause is appointed receiver in it, he does not thereby lose his privilege of acting as party.27 It has been held in Tennessee, that no one, not even a clerk of the court, can be made 18 Stone v. Wishart, 2 Madd. 64. 14 Sutton v. Jones, 15 Ves. 584; - v. Jolland, 8 Ves. 72. 15 Sutton v. Jones, 15 Ves. 584. 16 Ex parte Fletcher, 6 Ves. 427. 17 Lupton v. Stephenson, 11 Ir. Eq. 484. 18 Wynne v. Lord Newborough, 15 Ves. 283. 19 Daniell's Ch. Pr. (2d Am. ed.) 1973. See Attorney-General v. Day, 2 Madd 246, 254. Kerr on Receivers (2d Am. ed.), 136139. 22 Hoffman v. Duncan, 18 Jur. 69; Powys v. Blagrave, 18 Jur. 462; Kerr on Receivers (2d Am. ed.), 136. 23 Wilson v. Greenwood, 1 Swanst. 471; Blakeney v. Dufaur, 15 Beav. 40; Robinson v. Taylor, 42 Fed. R. 803, 812. 24 Shainwald v. Lewis, 8 Fed. R. 878. 25 Atkins v. Wabash, St. L. & P. Ry. Co., 29 Fed. R. 161; Kerr on Receivers 20 Attorney-General v. Gee, 2 V. & B. (2d Am. ed.), 136--139. 208. 21 Sykes v. Hastings, 11 Ves. 363; Sut ton v. Jones, 15 Ves. 584; Gardner v. Blane, 1 Hare, 381; Powys v. Blagrave, 18 Jur. 463; Ames v. Birkenhead Docks, 20 Beav. 332; Potts v. Warwick & Birmingham Canal Nav. Co., Kay, 143; 26 Wilson v. Greenwood, 1 Swanst. 471, 483; Blakeney v. Dufaur, 15 Beav. 40; Hoffmann v. Duncan, 18 Jur. 69; Powys v. Blagrave, 18 Jur. 463. But see Newport v. Bury, 23 Beav. 30. 27 Scott v Platel, 2 Phil. 229; Cowdrey v. Railroad Co., 1 Woods, 331, 350. a receiver against his will.28 It was held improper to appoint as assignee in bankruptcy of a corporation one who had been appointed by a State court receiver of its assets; 29 but it was subsequently held eminently proper to appoint as receiver of the assets of an insolvent corporation one who by the laws of the State that chartered it was the official custodian of its assets in case of its insolvency, even though that State was in another circuit from the one in which the suit for a receiver was brought, and the officer did not reside within the jurisdiction of the court.30 In this case, it was made a condition of the appointment that the receiver should pay into the registry of the court the proceeds of all assets collected within its jurisdiction; 31 but he was allowed to give sureties who were residents of the State where he dwelt.82 An order may provide for the appointment of a receiver in the alternative to other relief.33 Recent statutes provide that no clerk or deputy clerk of a Federal court shall be appointed receiver except for special reasons which must be assigned in the order of appointment; and that "no person related to any justice or judge of any court of the United States by affinity or consanguinity, within the degree of first cousin, shall hereafter be appointed by such court or judge to or employed by such court or judge in any office or duty in any court of which such justice or judge may be a member." 35 34 § 256. The Receiver's Security. As a general rule, the order for the appointment of a receiver provides that he shall give good and sufficient security for the faithful performance of his duties.1 This, by the English practice, was usually a recognizance entered into by the receiver and two or more sureties, whereby they, the cognizors, acknowledged "themselves to be indebted to the cognizees (usually the Master of the Rolls and the senior Master of the Court) in certain sums of money to be paid on certain days therein mentioned; in default of which they will and agree that the said sums shall be levied and recovered of them, their heirs, 29 Waters v. Carroll, 9 Yerg. (Tenn.) 102. 29 In re Stuyvesant Bank, 5 Benedict, 566; s. c. 6 N. B. R. 272. 30 Taylor v. Life Association of America, 3 Fed. R. 465. 32 Taylor v. Life Association of America, 3 Fed. R. 465. 88 Curling v. Townshend, 19 Ves. 628. 35 25 St. at L. ch. 873, § 7, p. 554. 31 Taylor v. Life Association of Amer- 1977; Mead v. Lord Orrery, 3 Atk. 285; ica, 3 Fed. R. 465. Tomlinson v. Ward, 2 Conn. 396. |