The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1904-02-26
BLOW THAT ENDANGERS RIGHTS OF ALL COR.
PORATIONS.

Elsewhere we print the order OF Judge
Purneli, of the Federal Court. putting the
Atlantic and North Carolina Railroad IN
the hands of a receiver-and in the hands
of a man who has been in Raleigh over
week trying to induce the Governor to
lease the road to him at a rental OF
about per cent His offer is evidence
that the road is not bankrupt, and the
application for the receivership states
nothing that iustifes the unwarranted
and indefensible act of the Federal Judge.
There is not single creditor demand
ling this action and not a single bona
fide stakeholder. The man, Finch, upon
whose application a receiver was appoint
ed, did not own a dollars worth of stock
in September, 1903, and has evidently
come into possession of little stock re-
Gently for the purpose of qualifying to
wreck the valuable property, or to injure
its prospect OF paying dividend. In
no real sense is he stakeholder. enough
aggrieved to bring such a suit, for his
ownership of stock is too recent to war
rant his right to throw the property into
the hands of a Receiver.
The action of Judge Purnell is deserving
of the severest criticism. If any minority
stockholder in any corporation may throw
his company into the hands of receiver
without notice and hearing, then
the laws of property rights are
annulled and Federal Judge can
deprive nine-tenths of the owners of
any corporation of the control of their
property, and this may be done by some
designing person who buys a few shares
Of stock for that very purpose! Thisde-
stroys the very foundation of safety and
confidence in all corporations. 1t not
only works hardship, but Judge Pur-
,nell's action is in conflict with the law
and the authorities. The universally &C
cepted principle of law is that Receiver
of a corporation should never be appoint
ed without notice except as follows:
/. Unless there is danger of a removal
of the assets beyond the jurisdiction of
the Court
.. Where the corporation cannot be
found.
g. Where it is "a nonresident and is
removing it's property or doing some other
act which would be greatly injurious,
and which would be accomplished in the
delay necessary to giving notice.
In all cases, except the three here men
toned, notice should be given to the ad-
verse party before the appointment of a
Receiver is made Here are a few Of the
authorities contained in the textbooks:
Thompson on Corporations. Section $3.50,
concludes as follows: Nevertheless, the
| best authorities concede that such an ap-
pointment should not be made withou:
notice except upon the gravest emergency
demanding immediate interference of the
Court to prevent irreparable injury
| Bates on Federal Equity Procedure, Sec
ton 5S7: 1T is a general rule that no.
tice of an application for the appointment
of a Receiver must be served on the ad-
verse party, except when the defendant
resides out of the jurisdiction of the Court
practice of the court in ordinary suits,
Receiver cannot be appointed ex parte,
before the defendant has had an oppor-
tunity to be served in relation to his
rights; except in those cases where the
corporation is but of the jurisdiction or
the Court, or cannot be found, or where,
for some other reason. it becomes abso
lutely necessary for the Court, to inter
fere, before there is time to give no.
tice to the opposite party to prevent
the destruction or loss of property"
The same editor. in Chapter 58S, says:
1.-The Court will not, as a general rule,
appoint a Receiver without previous no
tice of the application to the adverse
party, unless he resided out of the juris-
diction of the Court, and could not be
served, or had absconded to prevent SER
vice of subpoena upon him, or had de-
parted the realm to be absent several
months, or had no residence or place OF
business within the jurisdiction of the
Court where a subpoena could be served
upon him, or where other special circum-
stances existed, and in consequence OF
which the plaintiff would sustain ire
parable injury by delay
Chuck & Becker, in Section 1e lay down
the law as follows: Courts of equity
are exceedingly unwilling to appoint a
Receiver on an ex parte application. 1t
is now the settled practice not to ap-
point Receiver ex parte, thereby depriv-
ing corporation of the possession of
its property. before it has had an OBJ
portunity to be heard in relation to its
rights, except in those cases where it
is out of the jurisdiction of the Court or
none of its officers can be found; or
where, for some other reason, it becomes