Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1886-01-27
RECEITER REMOVED.
Action OF Judge HoIladay in.thc Gallego
MillsCa

Action OF Judge HoIiadny in'the bhlitEo
Mills Case.
In the matter of the Gallego Mills
roceivership Judge Holiday, Of the
City Chancery Court, yesterday rem
dered the following decision:
This cause now comes before me on
an application to remove Thomas Potts
as receiver Of the court in the pending
cause Of Stokes and others against the
Gallego Mills Manufacturing Company
and others and appoint another in his
stead.
Mr.. Potts was appointed on the 2Sth
day Of November, 1855, at the instance
of the frst-mortgage bondholders in
what is commonly known as friendly
suit, brought by them to enforce their
lien and wind up the affairs Of the COM
pany generally. The proceedings were
harmonious in every particular the
pleadiDgs contained not suggestion Of
the grave charges made in the bill filed
by the Merchants and Planters Saving
Bank. The selection Of the receiver
met with the approval of all parties
then before the court, and il was sup
posed that no reasonable objection
could be raised against him by any
creditor who might thereafter come
into the suit. The litigation has
now, however, assumed differ
ent character, for the bank charges,
among other things, that Mr..
Potts is a large creditor Of the
company that he is now president;
that prior to his election as president he
was yice-president and director that
the bank is the holder Of hypOthecated
warehouse q certificates that large
sums Of money were loaned upon tho
faith Of this security; that the products
represented by these certificates were
sold and the proceeds disposed Of by
the persons managing the mill prior to
the election Of Mr.. Potts as president,
but during his term of Office as vice.
president and director that he and the
other directors of the corporation knew,
or should have known, Of these trans
actions; and that they should be held
personally responsible in either event for
all loss to the bank in the premises
and it is insisted by counsel for the
bank that Mr.. Potts is disqualified from
acting impartially as receiver.
Mr.. Potts has filed an answer, in
which he denies and repels every sug-
gestion rejecting upon his conduct as
creditor, director, yice-president, prcsi-
dent, or otherwise, and contends that
no valid reason exists for his removal.
The cause cannot at present be con.
sidered upon its merits, and the sole
question to be determined is whether,
with the charges on the one hand and the
denials on the other, it is advisable to
retain Mr.. Potts as receiver. 1t is the
duty OF the Court to administer the
assets of an insolyent corporation in
the most economical and discreet man
ner; and in order to accomplish this |
end the appointment of receiver is
usually necessary. lie is simply the |
hand Of the Court to take charge of the
books of the company, collect out
standing claims, preserve the property, |
ETC., etc., until all liabilities can be
correctly ascertained and the assets ap. |
piled to their liquidation according to
respective rights of the creditors.
For these and other reasons, which |
might be given at great length, it is
eminently desirable that the receiver,
so far as practicable, shall command
both the confidence and cooperation of
all parties interested and, without in
tending to pass directly or indirectly
upon the merits Of the controversy to be
in this suit or casting any
mputation upon the character or repu-
tation of Mr.. Potts, | am Of opinion that
pending the litigation the receiver should
be entirely impartial and disinterested.
shall, therefore, enter an order for
he removal Of Mr.. Potts and the ap-
oointment of Mr.. William Ellyson as
receiver.
Mr.. Ellyson, the new appointee, is a
ION Of Mr.. Henry X. Ellyson, and is a
prominent young member Of the Rich.
nond bar. The appointment seemed to
i've general satisfaction to all parties
The bill will now be filed in the
Jerks Office Of the Chancery Court and
processes be served on the various de-
The case cannot be matured
% as to be ready for action by the
ourt until its next term, in April, un-
ess all the defendants consent to its
'eing placed on the docket. Probably,
Ehen the case is before the court regu-
arly, the first step will be to refer it
o a commissioner to examine all the
ooks Of the Gallego Company and take
roofs as to the allegations in the bill.
may take twelve months or more to
AXE the proof concerning the various
uestions arising in the cause, and until
his is done no question Of Importance
! it is apt to be decided by the Judge. =