Evening journal., 1919-09-26
REFUSES TO REMOVE
.CEIVERS' COUNSEL
continue from FIrst Page.

corporation Of the state OF Delaware.
Motion to dismiss the bill by solicit
tors for some Of the defendants. ON
motion, Richard :. Rodney and John
NJ. Richardson, Esquires, were per-
mtted TO appear specially 20 make the
motion. The motion was based on the
improperly in the selection OF a solici-
tor by the receiver. The facts appear
in the opinion.
Richard :. Rodney and John NJ. Rich
ardson, for the motion.
Henry Rldgely, for the receiver, the
complainant.
The Chancellor-Th Lewes Fisheries
Company, a Delaware corporation, hay-
ing been dissolved voluntarily pursuant
10 the provisions OF the Delaware
statute. lis directors as trustees were
winding up IFS affairs. the duty and
right 10 do so being imposed upon and
given TO them by the statute. The cor
poratlon has no creditors. While this
winding up was proceeding. Charles V
Jones, a stockhOlder OF the company, in
1917 fled his bill in chancery charging
misconduct on the part Of officers and
directors OF the company, and asking
that a receiver be appointed I'm the
legged diverted assets and conclude the
winding up. Power TO appoint such
receiver is given by statute, but the
statutory duty and right OF the direc-
tors TO wind up the affairs Of the COM
pany is not interfered with by the
court, except for reason shown, or by
consent Of the directors. When the
bin OF Jones was filed the reasons for
the appointment OF a receiver were
deemed sufficient, and the duty and
power TO wind up was taken from the
directors and transferred 10 the re-
ceiver. BY the decree the receiver was
ordered TO collect and recover any and
an money and assets thereof and unlaw-
fully and improperly diverted from said
company, and damages sustained by
said company through any fraudulent
and unlawful acts Of its officers, as in
the bin OF complaint filed in this cause
set forth, aud with power 60 prosecute
and defend in The name Of said cor
porali0n, or otherwise, all such suits
as may be necessary or proper for the
purposes aforesaid" etc Pursuant 10
this decree the receiver filed a bill
IN Ch3ncery against the officers and
directors Of the company to recover
The misapnropriated assets, and his So
licilor IS the solicitor for the com
plain9nt, Jones.
some or the defendants have ap-
pcared generally; other defendants had
leave 20 appear specially for the pur-
pose Of moving 90 dismiss the bill. and
moved i0 dismiss II on the ground that
the solicitor for the receiver was the
same person who acted as solicitor for
Jones The motion has been argued.
There are two general kinds OF re-
ccNerships. One Is that used where
90 preserve rights pending litigation. or
SOME adjustment Of rights relating 10
property. IL is desirable that the sub
leci-maiier Of the controversy be In
fne hands OF a stakeholder. acting as
tae arm N the court. This is peculiar
ly a conservation receivership. and the
property is in custOdls legis. The 9th
cr Kind IS the winding up kind. such
as The administration OF the affairs OF
partnerships and insOlvent and dis
solved corporations.
In each OF these kinds OF receiver !
ships impartially as between conflict |
ing interests. both by the receiver and ]
his legal adviser. Is ordinarily essen /
tial for obvious reasons Receivers OF |
corporations. whether solvent o. IN /
solvent are most usually appointed at /
The instance Of c,editOrs or stuch-
holders. or both combined. wlaiev-r !
the ground therefore be. When cor
poration becomes insolvent usually tie /
persons chiefly interested are the credi- |
tors. But the stockholders also maS
be viially interested. 10 may turn out
mat the assets are more than ade-
uate 10 pay the debts. and they are /
Interested 20 have a Just ascertain
ucnt of The amount due the several |
creditors. In addition, If their shares
os stock are not paid for, their liability
40 creditors for the unpaid balance OF
me par value Of the stock Is an asset
for the benefit OF such creditors In
case OF a deficiency Of corporation as
scts for the purpose. Each creditor
mas AN interest against every stock
nod6r who has not paid in full for hi,
stock. Every stOckholder has an IN
i,rest as against every creditor, and
possibly against his fellow stockhold-
ers. who have not paid for their stocf.
OBVIOUSLY. therefore the receiver and
mis- counsel should be impartial 5e-
tween and independent OF stockholders
and creditors, and neither the com
pl9inant, or his solicitor, should De
appointed receiver Of such corporation,
or act as counsel for a receiver. Not
only Is the rule in such cases well
settled, but the reason therefor is
plain.
Theirule and the reason therefor are
equally plain and obvious as 10 pure
conservatory receiycrship. and to re-
cciverships Of partnerships. For the
same reasons the legal adviser OF the
receiver should be impartial between
all interests, and 70 Is unwise and I'M
fair, and, therefore. wrong for The court
TO appoint. or the receiver TO select, as
his adviser his personal counsel, or the
legal adviser OF the complainant. This
involves no reflection upon the moral
integrity either OF the receiver. or his
counsel. 10 IS based on The frailtles OF
human nature and the effects OF uncon-
sciOus influence upon conduct where
there are ties Of business. professional
or social connection. Wherever there
is a flduclaFy relationship the strlctest
rule as 10 lmpartlalty and dislnterest IS
enforced for the protection OF both the
trustees and beneficiary. ,
There is. however. good reason and
ample authority TO Justify a receiver /
lppolnled for the purpose, and under ;
he circumstances In this present case
In selecting as his legal adviser the So !
iclior for the stockholder. Jones. who
started the litigation 10 mearih and
obtain redress for the wrongs alleged n
10 have been done 10 The company. For :