Case ID: abbn-cas_25/html/0438-01.html
Source: Caselaw Access Project
Author: {"author": "Pratt, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CAMERON v. HAVEMEYER. HAVEMEYER v. BROOKLYN SUGAR REFINERY.
    
      N. Y. Supreme Court, Second District, Kings County, Special Term;
    
    
      November, 1890.
    1. Injunction; preliminary, when proper; Sugar Trust; re-organization..] In an action by a certificate holder, under the so-called?. Sugar Trust agreement, against the trustees thereunder for an accounting and distribution of the moneys in their hands,—Held, that a preliminary injunction was properly granted, restraining-the defendants from any plan or scheme of re-organization of the Trust, until they gave such information of the facts within their-knowledge affecting the value of the certificates, as would enable the certificate holders to stand upon an equality, so faras knowing-what the scheme was to be, and what was the financial condition, of the Sugar Trust.
    2. Corporation ; Sugar Trust; title of trustees.] The agreement by which the trustees of the so-called Sugar Trust received the shares, of the stockholders in the several corporations composing the trust, and issued trust certificates in lieu thereof, having been judicially declared illegal, the trustees hold the property, merely as custodians, in a trust capacity, for the benefit of the certificate holders, not under the original deed of trust agreement, but under a trust, which arises by operation of- law. So held, upon granting the motion of a certificate holder for an injunction and a receiver in an action against the trustees for an accounting and distribution of the property held by them.
    3. The same; title to stock; transfer on Soofo.] To enable a certificate holder to make such motion for an injunction and a receiver,, it is not necessary that his certificate should have been transferred-, on the books of the Trust before the commencement of the action, although the Trust agreement made the certificates transferable.on the books of the board and not otherwise ; but it is enough, that the plaintiff was at the commencement of the suit the true owner of the certificates.
    4. Thesam,e; protection of certificate holders in Sugar Trust; appointment of receiver.] The purpose of the Sugar -Trust agreement having failed, each certificate holder has a right to demand that the affairs of the Trust shall be wound up, that he shall have his share of the joint property, and that his interest therein shall be protected in the usual legal way by the courts, and it is, therefore, proper for the court to appoint a receiver of the property upon the motion of a certificate holder, notwithstanding a plan of re-organization on a legal basis is in process of execution by the trustees, and although the property is in the hands of men of the highest standing in the community for business capacity and integrity of character.
    Motions for an injunction and the appointment of a receiver.
    After the decision of the court of appeals in the action brought by the people to declare the franchise of the North River Sugar Refining Company annulled and forfeited, wherein it was determined that the action of the defendant, in concert with other similar corporations, in transferring all its stock to a board of trustees in exchange for Trust certificates, and surrendering the vital elements of its franchise, justified a judgment for its dissolution for violation of its charter, the second action above named was brought by Henry O. Havemeyer and his co-trustees, constituting the so-called board of the Sugar Refineries Company, popularly known as the Sugar Trust, against the Brooklyn Sugar Refinery and the other corporations which had entered into the Trust agreement, which had been judicially declared illegal, and certain certificate holders, asking that the agreement be rescinded and declared inoperative, and “ that it may be declared that the plaintiffs are under no obligation to the parties to said agreement or to the holders of certificates issued thereunder, to continue in the discharge of the trust thereby created or purporting to be created ; that there may be a sale and conversion into money of the property now in plaintiffs’ bands which they have received and now hold under and by virtue of said agreement ; that the persons who are interested in the proceeds of such sales, and in the moneys now in plaintiffs hands, which they have received under and by virtue of said agreement, may be ascertained j that all such persons, and particularly all the holders of certificates issued as aforesaid, be required to assert their rights and claims, if any, in this action, and be enjoined from instituting or prosecuting any other action in that behalf ; that upon accounting for the moneys and property remaining in the hands of the plaintiffs in this complaint, and paying the same to the persons entitled thereto, the plaintiffs may be released and discharged from all liability in the premises under said agreement and the certificates issued as aforesaid in pursuance thereof.”
    While this action by the trustees was pending, Duncan ■Cameron and John EL Gleason were joined as defendants therein upon their application, they claiming to be certificate holders under the' trust agreement.
    Subsequently, the action first above named was brought by Duncan Cameron against Henry O. Havemeyer and his co-trustees under the trust agreement, plaintiff suing as one «of the certificate holders in behalf of himself and all others in like situation. The complaint alleged that the defendants were willing to account to the certificate holders as appeared by their allegation to that effect in the prior action brought by Havemeyer, and, after setting forth the large amount of property in the defendants’ hands, consisting of money and the stock certificates of the several corporations interested in the trust, upon which they had illegally voted in the election ■of trustees of such corporations, and of nearly one hundred thousand tons of raw sugar, over which defendants had no lawful power of sale, and which was kept in warehouses at great expense, alleged that these results “ to the certificate holders have been intentionally brought about by the defendants for the purpose of procuring a re-organization in the hope of carrying out the fundamental object of said Sugar Refineries Company, in order to promote and advance their individual interests, they being large holders of said certificates in their own rights severally, and that they do not •desire to secure a prompt winding-up of said company and a distribution of said property, either by prompt sale or by actual distribution of the property itself, but really desire to keep it together to the end that it may be sold substantially in bulk, so that they and those admitted to their confidence, and co-operating with them, may carry the same over into some new combination; that in order to further this scheme they selected the firm of Wormser & Co., and the firm of Nash, Spaulding & Co., who were thus co-operating with ■defendants, and made them parties defendant to their said action for the professed purpose of representing the interests of all certificate holders in said suit, but really for the purpose of furthering their own design, it being a part thereof to delay the entry of final judgment in their said action so that they might inveigle certificate holders into a scheme of surrendering their certificates to defendants or their appointees and agents, and thus clothing them or their agents with power to represent them in their aforesaid scheme of selling said property in bulk and distributing the proceeds; that that scheme is against the interests of the body of said certificate l'c’Jers, because the defendants either comprise or ■ control substantially all the persons who refine sugar and who would naturally be purchasers at such a sale,.and if the defendants shall be permitted to carry out their said scheme, all natural competition at such a sale will be rendered impracticable, if not impossible, and defendants and those in •co-operation with them will thus obtain said property substantially at their own prices, and the distributees of the proceeds will get comparatively little; that in aid of defendants’ scheme they have employed the banking firm of Messrs. Kidder, Peabody & Co., to submit a scheme of "re-organization, and meantime obtained the consent of the •Central Trust Company, of New York, to receive certificates "from certificate holders, which they intend to use and control "In furtherance of their designs; and also by keeping their plans a secret from certificate holders and withholding from them fair and legitimate information of facts affecting the value of the property in their hands, they create doubt in the minds of the certificate holders, and so induce sales of certificates in the open market, which they take up secretly through their agents ; and so do they abuse the trust which equitably rests upon them through their possession of said property, and the confusion which they have created in the-rights of the certificate holders; that defendants’ said action, is collusively brought, and that although judgment might-long since have been entered therein if diligently prosecuted^, yet no judgment has been entered therein, and no interlocutory application has been made by defendants to place-said property in lawful custody, or in the actual control of the court, or to utilize the same as might have been promptly and lawfully done, and as it was their duty to do.”
    The plaintiff Cameron moved for a preliminary injunction upon the complaint and an affidavit alleging that “ the-defendants have not commenced this action for the Iona fidepurpose of utilizing it to secure a prompt, winding-up of thet affairs of said Trust and an actual and prompt distribution, of the money and other property in their hands among thet body of certificate holders interested therein, but because-they saw that such a winding-up would be necessary before-they could finally extricate themselves from the dilemma in which they were placed by the opinions of the courts of this-State affecting the character of their combination, popularly known as the ‘ Sugar Trust,’ and for the purpose of controlling legal proceedings to that end and inducing others to delay the institution and prompt prosecution of legal remedies for such winding-up and distribution ; so that defendants and those admitted to their confidence and co-operating-with them may, meantime, by one means or another, obtain, control of the certificates, and then, when they get ready, enter or procure the entry of a judgment which shall authorize a sale or such disposition of the property in their hands-substantially in bulk' so that it may be kept together and be-made the basis or capital of a re-organization, or new organization, for the purpose of accomplishing the fundamental purpose of the sugar trust, namely by a combination of sugar producers and refiners, to control the production and sale of' sugar in this country and elsewhere so far as practicable, to-the end that the)' may obtain prices therefor for themselves far in excess of the prices which would prevail if the trade in sugar were left to natural and legitimate competition among producers, refiners and dealers ; and that they in the-meantime intend to make large incidental profits as individuals by speculating in the certificates in the market and in sugar, and to that end to keep certificate holders in doubt and anxiety as to what is really for their interests, thus inducing such holders either blindly to place their certificates under defendants’ control, with unlimited power to do as they please with them, or else to induce them to sell the-same so that they may be purchased in the interest of such scheme of re-organization for defendants’ benefit and the-benefit of those in co-operation with them, at prices less than their real value; and that they intend, when they get ready, to have such judgment entered in their said action as will authorize a judicial sale or disposition of the assets in their hands substantially in bulk after they have so consolidated and solidified the purchasing elements of the sugar-trade that there will be little, if any, competition at such sale, and that they may obtain the assets in their hands substantially in bulk free from the Trust obligations which now fetter them, substantially at their own prices, and thus leave-such certificate holders as shall hold on to their own certificates to receive a dividend upon the product of such judicial sale or disposition of said assets, which product, in view of the conditions under which the sale will necessarily be made,, if defendants are permitted to carry out their scheme, will be much less than the real value of the Trust property. That such a sale, after such combination shall have been effected, will be an abuse and perversion of the powers of this court, because all fair and legitimate competition will have been avoided and rendered impossible, and besides that, the plaintiffs will be left to conduct a judicial sale, when they arc to he either the purchasers or personally interested in the purchase.”
    
      The defendants, Oaineron and Gleason, also moved in the second action above named for the appointment of a receiver.
    The preliminary injunction granted by the court recited that, it appearing “ that there is reason to apprehend that said property or some part thereof may be removed from this State, or disposed of or used pending said motion, and that defendants arc endeavoring to secure control of the certificates of shareholders in said company for their own advantage, without disclosing full and fair information of facts within their knowledge affecting the value of the shares under circumstances which operate unjustly towards shareholders, I do hereby order and require that until the hearing and determination of the said application for a receiver and injunction above noticed, or any like motion by plaintiff for a receiver in defendants’ said action, noticed for same time and place, that defendants, and each of them, and each of their agents, servants and appointees, including the Central Trust Company, and Messrs. Kidder, Peabody, & Co., do absolutely desist from soliciting the delivery or receipt of any certificate from any shareholder of said so-called Refineries Company, or accepting any such certificate in •consequence of solicitations previously made, or doing any •act or thing in that regard which has any relation to any plan or purpose of re-organizing said so-called company or the business now or lately conducted by it or defendants for it, except that they may preserve certificates sent them ; and that defendants do absolutely desist from employing or using ■said property or any of said property in their hands in any trade, business or speculation, and from removing the same or any part thereof from this State, or suffering or permitting ■such removal, and from selling or disposing of the same or any part thereof, and from voting upon any share of the stock held by them or either of them in the corporations or •either of the corporations composing the so-called Sugar .Refineries Company.”
    It was provided in the trust agreement that the trust certificates to be issued by the board of trustees should contain the following provision: i£ The shares represented by this certificate are transferable by the holder and his personal representative in person or by attorney upon the books of the board and not otherwise, and only upon a surrender of this certificate.”
    With reference to the fifteen per cent, of the shares belonging to the several constituents of the trust, the trust agreement provided as follows : 6< Of the shares allotted to the several refineries they shall leave fifteen per cent, with the board, and these shares and any shares not allotted of the §50,000,000, except as herein otherwise provided, shall be subject to be disposed of by the board, either for the acquisition of other refineries to become parties to this deed, payment for additional capacity, or by appropriation to the several refineries.”
    The decision at circuit in the case of People v. North River Sugar Refining Company, is reported in vol. 22 of these reports, p. 164, and the affirmance in the court of appeals in vol. 25, p. 1.
    
    
      John L. Hill, for the motion.
    
      Elihu Root, John E. Parsons, Edward M. Shepard and Mr. Johnson, opposed.
    
      
       See note to this case on p. 21, of vol. 25, on the question for what purposes a corporation is to he deemed a person distinct from the members.
    
   Pratt, J.

In the case first above named a motion is made for the continuance of an injunction and for the appointment of a receiver; and in the second case there is a motion for a receiver by defendants therein.

Immediately after the arguments upon these motions the defendants submitted a proposed plan of re-organization and a sworn statement of the assets and liabilities of the Sugar Trust, so-called. By so doing, that part of the preliminary injunction to which there were most strenuous objections became inoperative, to wit, the part that restrained any plan or scheme of re-organization, as the whole purpose and effect of that part of the injunction was to restrain the defendants in such scheme until they gave certain information called for (which has since been done) so that each of the certificate holders could stand upon an equality, so far as knowing what the scheme was to be and what was the financial condition of the Sugar Trust. Until such exhibit was made the injunction was eminently proper and in accordance with the practice in equity. ¡Neither can I see how an injunction could affect the value of the property in the trust which did not interfere with the manufacture or sale of sugar, nor take one dime from the property belonging to the trust or •depreciate its intrinsic value.

It may be well to consider the relation of the defendants in the first suit to the subject of the suit. The best statement of their position is furnished by the defendants themselves under oath, In the bill of complaint filed by them in the suit of Havemeyer and others against the Brooklyn .Sugar Refining Company and others above named, they state that they have a large amount of property in their hands which they received pursuant to the original trust agreement, which is conceded by them to be unlawful and void, and that they therefore ought not longer to exercise the duties of trustees under it. Certainly, if it be void, they ought not to attempt to perform the duties which its language imposes on them, because such acts would constitute further offences against law, which would subject the corporations composing the trust to forfeiture of their charters. Besides, they profess to desire to be relieved from responsibility and from their positions. ¡Now, á most serious question arises, whether or not they have any title, or are anything more than mere custodians of property which belongs to others, to wit, the certificate holders.

At the present time, I think, they are mere custodians. If any argument is required to establish this proposition it will be found in the history of the organization of the Sugar Trust. It is true that the original agreement cannot be enforced as a contract, but it establishes the fact that each stockholder in each corporation in the trust empowered these eleven persons (trustees) to act in receiving his stock •and in issuing a so-called trust certificate in place thereof, •which certificate the stockholder accepted as evidence of his right to an undivided interest in the pool of stock ; and it •also settled another fact, that these trustees had further power to dispose of the fifteen per cent, of the stock of the pool for the benefit of those who should become certificate holders. These powers have been executed. The original stockholders have accepted their trust certificates, and some have been sold in the open market by their original holders to persons who have purchased and paid for them. The .same is true of the fifteen per cent, of certificates. It is, therefore, obvious that so far as these sales were made by the original holders they are estopped from questioning the title of the persons who have bought these emblems of title. The holders of certificates therefore derive title from the .stockholder’s, not from these trustees, but from the original owners of the stock, through and by means of the executed authority given to these trustees by such original stock ■owners. It is not necessary, however, to determine where the legal title is, as there can be no doubt that they hold the property in a trust capacity, not under the original deed ■of trust agreement, but under a trust which arises by operation of law. Indeed, upon the argument, it was conceded that the property justly belonged to the trust certificate "holders; and in the bill of complaint just referred to, the plaintiffs, to wit, these trustees, stated that said board of trustees held the property which came into their hands by virtue of said trust agreement, for which they were willing to account in this action to the certificate holders, in the proportion which the amount of the certificates held by them respectively bears to the amount of the whole number ■of certificates issued.

We therefore find the defendants in possession of property belonging equitably to others, which came into their hands under an agreement void as to the main purpose for which it was made, and which they cannot legally use for the purposes for which it was placed in their hands; and they are utterly powerless to convey and give a good title or-to distribute it to its rightful owners. Whether the agreement's valid in some respects wherein it has been executed, or whether, under the circumstances, the certifícate holders-compose a partnership, it is not material now to determine, as these motions relate strictly to the custody and disposition of the property.

The defendants object to the plaintiff Cameron being heard upon these motions, for the reason, as they assert, that-, he did not own his trust certificate when he began his suit. This is predicated on the fact that two hundred shares of his alleged one thousand two hundred shares of stock were not transferred on the books of the Sugar Trust until the 15th inst., and the suit was commenced on the 14th inst.; thus-assuming that he could get no title without a transfer on the-books of the trust; but the only ground for such alleged necessity is the terms of the original Sugar Trust agreement,, and since it is conceded that the instrument is and always-has been void, it is difficult to see how it imposes any such restriction. But this objection, if it is valid, does not apply to the stock of Gleason, who also asks for a receiver. It was enough, however, if Cameron was at the time of commencing his suit the true owner, although he had not had his stock transferred on the books of the trust.

It must be admitted that the rights of the certificate-holders are.equal, and that the holder of a few certificates is equally entitled to protection with one who owns a large-quantity. The Sugar Trust is not a corporation, and hence the statutes applicable to the re-organization of corporations-have no application. It is not, therefore, a case where a majority can coerce the minority into any new scheme of re-organization. The purposes of the agreement or copartnership, or whatever it may be called, having failed, each. certificate holder has a right to demand that the affairs shall, be wound up, and that he have his share of the joint property, and I know of no way that such an event can be accomplished, except by the unanimous consent of the certificate-holders, or by application to the courts. In the meantime,., what is to be done with the property is a vital question. Shall the business that has been declared illegal be continued and thus place in jeopardy the charters of all the corporations connected with the trust % Or shall it be taken into custody by the court, and held intact for those interested in it % Shall this vast amount of property be left in the hands of a Board, acting without any defined duties or restrictions, without any legal authority, and subject only to the, will or discretion of a majority of its members %

It is conceded on all sides that, at some time, it will be necessary to apply to the court to appoint some person to-dispose of the property of the trust and divide the proceeds. Upon one hand we have certificate holders asking for immediate settlement of the trust; and on the other, the claim-that it is not a proper time to interfere with the trustees, as-there is a plan of re-organization in process of execution. This latter claim may be answered by saying that a receiver - in no way will interfere with a proper plan for re-organization. In fact, no plan can be carried out without a receiver- or some one appointed in place of such an officer to dispose • of the property, as it will be utterly impracticable'- to=proenre .- the assent of one thousand six hundred certificate holders to» come in at once and assent to any scheme of re-organization:. The certificate holders, each for himself, has a right to demand that his interest in the property shall be protected in the usual legal way by the courts, and that he shall be left to decide what disposition he will make of his certificates,, i. <?., to determine for himself whether he will combine with others and form some plan of legal re-organization or take his share of the trust property. Indeed, in case- any legal and satisfactory re-organization scheme is proposed, I see no reason why those certificate holders composing it may not have. their share or the hulk of it speedily turned over to them, always leaving enough of the trust property in the hands of the receiver to meet the demands of creditors and certificate holders who do not care to come into the new scheme.

The law of the case in respect to the appointment of a receiver is too plain to require a long statement. Where a bill is filed by one of several partners it is a matter of course to appoint a receiver upon application of either party (Martin v. Van Schaick, 4 Paige, 479; Innis v. Lansing, 7 Id. 583; Jackson v. De Forrest, 14 How. Pr. 81).

In Martin v. Van Schaick, the court said : Each partner has an equal right to the possession and control of the partnership effects and business, and, if they cannot agree among themselves, it is a matter of course to appoint a receiver.”

In the Fidelity Ins. Co. v. Huber (13 Phila. 52) it was held that a receiver would be appointed of property in the hands of a person who was a (Le facto trustee for several owners, upon the application of some of them and against the opposition of others, and although no fraud or misconduct of the custodian was alleged. “ It is not necessary to entitle a party to the appointment of a receiver that the property in question should be in danger. It is enough that a good equitable title should be made to appear, and that the remedy at law would not fulfil the requisition of justice” (Kerr on Receivers, 3d ed. p. 10).

The right of a party to a receiver is a property right, and the discretion of the court must be exercised in accordance with the well-settled rules of law. Ho sufficient answer has been submitted to these legal propositions ; but the defendants insist that the court shall exercise its discretion in permitting them to retain possession of the property and continue business in the same manner as before, and urge as a reason that the price of the certificates in the market may depreciate. I cannot anticipate any such result. But if it were true that such would be the effect, it is a good answer to say that judicial decisions cannot be strained to favor «peculation in Wall street, where rumors and fabrications usurp the place of facts. Indeed, it is difficult to conjecture any more violent fluctuations in the stock than occurred •prior to any legal proceedings having been taken. If the receiver is appointed, the rights of the parties can be ascertained and the certificate holders will know what it is their interest to do. If a proper plan of re-organization is prepared, selffinterest on the part of the certificate holders will make them anxious to adopt it, so that if the re-organi.zation is good, the appointment of a receiver will help to carry it out without loss of time; and, in any event, the •certificate holders will be enabled to act with full knowledge •upon the matter.

To my mind there never was a clearer case for the appointment of a receiver. It is always a most embarrassing and unpleasant duty to perform, for the reason that conflicting interests make an unseemly struggle for recognition in the appointment of a receiver.. In this ease it is peculiarly so, owing to the fact that to the public it might appear that I had exercised a discretion in taking the property from the custody of men of the highest standing in the community for business capacity and integrity of character; but it must be remembered that the court at general term has held that the agreement under which they acquired the property is void, as creating a vast monoply, and so against public policy, and that the trust cannot legally further carry on the business. It must also be noted that such a course does not interfere with the manufacture of sugar, but prevents the corporations belonging to the trust from violating the law and incurring a forfeiture of their charter.

I cannot, therefore, but think such a course is not only demanded by law, but it is to the best interest of all concerned; for the public, because it will free the corporations composing the trust from their illegal relations with it, and permit them to become rehabilitated with their former powers and capacity, and thus avoid forfeiture of their charters and the train of calamities that would follow the interruptiou of the business of refining sugar; for the certificate holders because it will preserve the property and facilitate tli& speedy settlement of the matter, either by a re-organization,. ,if practicable, or a division of the property.

The attorney-general, it seems to me, has wisely exercised forbearance toward the corporations composing the-trust, in order that they might be extricated from their illegal relations without interruption to their business. The-appointment of a receiver will accomplish this result and give assurance that every certificate holder, without discrimination, will be justly dealt with, and a speedy re-organization or distribution of the property will be had.

The property is of such a large amount, the business so vast and complicated, that it seems to me wise to appoint at least two temporary receivers, or, if the plaintiffs in the second suit will move that a decree be entered in that suit, appointing permanent receivers, a decree can be entered to that, effect. Both parties may submit nominations for receivers, with proposed orders or decree, on or before Thursday, the 6th inst., to be left with the clerk. The amount of bonds-will be fixed at the time of naming the receivers. ■Company, or the scheme or plan of business popularly known as the '‘Sugar Trust;’ together with each and every muniment of title, evidence of indebtedness, or evidence of any right whatsoever, including the certificate for shares of stock of the several corporations involved in, or composing said Sugar Refineries Company, and each and every "book of account, entry of memorandum, relating to said property, or the business of said Sugar Refineries Company; and that each of them, ■and each and every of their agents and servants, and all other persons 'holding or having any of said property, are hereby commanded forthwith to transfer and deliver said property, muniments of title, evidences •of indebtedness, evidence of rights, certificates of stock, books of ■account, entries and memoranda to said receivers; and that they, and each of them, and each and every of their agents and servants do make full, faithful and accurate disclosure and discovery to said receivers of said property and things which they are hereby required to deliver, and •of all facts and circumstances known to them, and each of them, which ought to be known to said receivers in order to obtain and maintain possession of the property and things aforesaid, to the end that each ■and every lawful right, remedy and claim, of the holders of certificates, issued by said 1 Board,’ or by the members composing it, and of said Sugar Refineries Company, or of the combination popularly known as "the ‘Sugar Trust,’ may be preserved, and, if required, exercised and ■enforced during the pendency of this action.

“And it is further ordered that the said [trustees], and the said Sugar Refineries Company, and the combination popularly known by the name of the ‘ Sugar Trust, ’ and each and every of them, and each ■and every of their agents and servants, whether they are called members of said ‘Board,’ ‘Officers,’ ‘Members of a Committee,’ or otherwise, do absolutely desist and refrain from any further use, man■agement or interference with said property and each and every part thereof, and each and every of said things which are hereinbefore ■required to be delivered to said receivers, and that they, and each of them, do absolutely desist and wholly refrain from exercising or attempting to exercise any power, authority or control over the corporations composing or involved in said so-called Sugar Refineries Company, and from voting upon the stock, or any of the stock of any of said corporations except as they may be directors or officers in any of said corporations; and the said corporations who are defendants in said ■second above entitled action, and each of them, and each and every of their directors, officers, agents and servants, are hereby severally ■commanded absolutely to desist and wholly refrain from removing, sending or causing or suffering the removal of any of the property belonging to said corporations, or to either of them, from this State, except in the ordinary course of the business of said corporations, severally and respectively, and from doing any act in the name or names, of either of said corporations, except to carry on their regular, ordinary and lawful business."

Note on Actions for the Appointment of a Receiver.

The practitioner under the Codes naturally falls into the-habit of regarding receivership as a mere provisional remedy purely incidental to other relief asked in the same action. And this is indeed usually the case. Where the court is prayed to adjudge the title to property to he in one or another party, or-to direct and superintend its sale, the receivership asked for the purpose of putting the property into impartial and safe custody until judgment, or until sale and distribution is, in the sense of the Code, a provisional remedy. And the right to ask it is properly conceived as dependent on the prima faciecase made for other substantial relief to which it is an incident only.

But the provisions of the Code Eire so expressed as to preserve the larger power of the court. See 2 Abb. New Pr. & F. 116, and cases in note.

The original and inherent jurisdiction of chancery extends to taking charge by receivership on a bill for the purpose,, of-" any property which is in danger for want of such custody, quite irrespective of any necessity for a decree of the same-court as to right or title. And this with all other jurisdiction, of the courts of equity is preserved to our present courts by Code Civ. Pro. § 219.

This is a subject to which the standard treatises on equity and equity practice give little distinct attention; because-now that the powers of law and equity are combined in the-same courts of general jurisdiction, and courts of probate and administration are generally clothed with power to appoint a. temporary administrator, pending contest as to letters, the-occasions which formerly gave rise to suits merely to establish a receivership have become very rare.

But the indications are that modern usages of business and finance are giving rise to new classes of occasions for the exercise of the like power.

Whatever may be the proper view as to the limits of propriety m respect to actions for a receivership where no other-substantial relief is necessary, or where the other relief is only desirable as incidental to the protection of a receivership, or as a foundation for asking it, there celh be no doubt that contests of this kind Eire arising with increasing frequency.

It is useful, therefore, to notice that the inherent power o£ equity to hold out its hand to catch property that is falling into destruction or deterioration for want of a claimant clothed with immediate legal authority to preserve it, may be invoked by one interested therein, irrespective of whether the circumstances are such that an adjudication by the same court as to right or possession will be necessary. And the same power is now sometimes invoked on the ground of danger from an apprehended multiplicity of hostile claimants.

This power is not exercised where the property is already in litigation in a court having power to conserve it; and, if pending a receivership created in an equity suit brought for i iv purpose, litigation which can determine the right, is comm meed in a court having power to conserve, the court of equity will terminate its receivership as no longer necessary.

The reader who desires to pursue this subject and the limits within which the principle is confined in practice, will find a cine to the cases by consulting Colvin’s Case, 3 Md. Ch. Dec. 279; Rice v. Tonnele, 4 Sandf. 568; Am. Loan & Trust Co. v. Toledo, etc. R. Co., 29 Fed. Rep. 416; Covington Drawbridge Co., 21 How. U. S. 112; Beverly v. Brooke, 4 Gratt. 208; Hazard v. Credit Mobilier, 7 Reporter, 360; Hugh v. McRae, Chase Dec. 466; Liddell v. Starr, 4 C. E. Greene, 163; Kennedy v. St. Paul, etc. R. Co., 2 Dill. 448; Hitchin v. Birks, L. R. 10 Eq. 471.

In 22 Fed. Rep. 138, 272; 23 Id. 513; 29 Id. 162, are proceedings in the much questioned Wabash case, of the appointment of a receiver on the application of the mortgagor.

In Smith v. Danzig, 3 Civ. Pro. R. 127; s. c., 64 How. Pr. 320; and Eddy v. Co-operative Dress Association, 3 Civ. Pro. R. 127, 434, 442, the fact that the board resigned, as an intentional preliminary to applying for a receiver on the ground that the assets consequently had no legal custodian, was not regarded as sufficient reason for refusing receivership. 
      
       The order entered on this decision appointed receivers in each of the actions, “ of all and singular the property of every name and nature whatsoever, which now remains, or ought to he, in the hands, or under the control of [the trustees] or either of them, or their, or either of their agents or servants, or any of such agents and servants, under, by virtue or in consequence of the agreement by which said Sugar Refineries Company was formed, or because of the fact that said last named persons, or any of them, are or were the individuals who were referred to as members of the ‘ Board ’ provided for by said agreement; or because they, or any of them, were or are officers, members of any committee, or in the employment of such ‘ Board,’ or the members, thereof, or either of them, or in the employment of such officers referred to in said agreement, or either of them; or because said last named persons, or either of them, undertook to act or in fact acted as such members of said 1 Board,’ or as officers, or as members of any committee, deriving or at any time professing to derive title, power or authority under said agreement, to act in behalf of any person or persons interested or claiming to be interested in said Sugar Refineries.