Case Name: John D. Freeman vs. George Winchester
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1848-01
Citations: 10 S. & M. 577
Docket Number: 
Parties: John D. Freeman vs. George Winchester.
Judges: 
Reporter: Mississippi Reports
Volume: 18
Pages: 577–581

Head Matter:
John D. Freeman vs. George Winchester.
Whether a receiver appointed by the chancellor, in a suit pending before him, has the right in any case, unless he be specially empowered to do so by the order appointing him, to bring a suit in his own name, touching the subject of his receivership;— Quczre.
If the chancellor have the power to confer such authority upon a receiver, it can only be exercised by the receiver according to the appropriate remedy; the chancellor cannot convert remedies from legal to equitable. The receiver must sue in the court having jurisdiction of the subject-matter of the suit.
The legislature, by a law passed in the year 1844, provided for placing the-Mississippi Railroad Company in liquidation, for the benefit of its creditors ; the state filed a bill under the act, and 3?. was appointed a receiver,, with power to take possession of the notes and other evidences of debt, and to sue for and collect all moneys due the company. F., as receiver, filed a bill in his own name, to recover of W. the amount he had subscribed to the capital stock of the company. Held, on demurrer to the bill, that the liability of W. to the company, for his unpaid for stock, was purely a legal one; and, that even if F. could maintain any action therefor, in his own name, it would be an action at law, and not in equity; and, that the demurrer must be allowed. ■
Where a charter of a company provides for the forfeiture and sale of stock, on failure of the stockholder to pay, such remedy is merely cumulative. The company may also sue the delinquent stockholder at law.
In error from the decree of the district chancery court at Natchez; Hon. James M. Smiley, vice-chancellor.
On the 20th day of October, 1846, John D. Freeman filed his bill, in which he states, that on the 21st day of July, 1845, a bill was filed in the superior court of chancery, by the attorney of the state, on behalf of the state, and all other creditors of the Mississippi railroad company, against that company; staling that it was totally insolvent, and unable to construct the railroad, or pay its just debts. That bill contained prayers for an injunction, and for the appointment of a receiver to collect the assets of the company, and hold the same subject to the order of the court. An order was granted, restraining the company and all its agents from disposing of and meddling with the effects of the company; and complainant was appointed a receiver in the cause, “ with full power to take into his possession the bills, bonds, notes, and other evidences of debt, belonging to said company, with power to sue for and collect all moneys due on the same.
The bill further states, that in 1837, George Winchester subscribed for twenty shares of stock, of one hundred dollars each, in the company. It also proceeds to state the periods at which the subscription was payable, and the amount yet due; and prays for a discovery of the amount due on account, and that he may be decreed to pay the complainant the amount found due by him upon such subscription to stock.
Winchester demurred to the bill; the vice-chancellor sustained the demurrer; and Freeman prosecuted this writ of error.
John D. Freeman, in proper person,
Argued at length in behalf of the bill, and cited the following authorities: Stat. of 1844, p. 138; 3 Mason, 308; 16 Mass, 9, 15; King v. Elliott, 5. S. <fc M. 428; 1 Barbour’s Ch. Prac. tit. Receivers, 658-663; 2 Sto. Eq. 134-135; 6 Hill, 269; 1 Peters, 55; 14 Wend. 24; Laws of 1836, pp. 175-6; Laws of Miss. 702, § 1; lb. 830-1, <§> 3; Ang. & Ames, 420, § 5, et seq.
George ¡3. Yerger, for defendant in error,
Cited Sto. Eq. PI. sec. 508; sec. 260, 261; 1 Smith’s Ch. Prac. 638; 2 Atk. Rep. 213; 1 John. Ch. Rep. 60; Smiley v. Bell, M. & Yerg. Rep. 378; Ang. & Ames on Corp. 411-412; Ang. on Lim. 420; Sto. Eq. PI. § 484; Dunlap v. Gibbs, 4 Yerg. Rep. 94; Foster v. Hogsden, 19 Yesey, 180; Hoare v. Peck, 6 Simons Rep. 51; Cv.thbert v. Cressy, 4 Bligh’s Rep. 125; Tysonv. Pole, 3 Young & Coliyer, 266; Humbertv. Trinity Church, 7 Paige, 195 ; Vanhook v. Whitlock, 7 lb. 373.
J. T. McMurran, on the same side,
Cited 3 Am. Eq. Dig. 555, §§ 18, 19, 20 ; 1 Smith’s Ch. Prac. 638; 1 John. Ch. Rep. 60; Stat. of 1836, p. 173, et seq., § 4; 1 Bro. Ch. Rep. 27; 1 Met. & Perk. U. S. Dig. 556, §§.74, 75, 76; 2 Term. Rep. 373; 2 Bibb, 575; 14 John. Rep. 238; Ang. & Ames on Corp. 409-423, chap. 15.

Opinion:
Mr. Chief Justice ShaRkey
delivered the opinion of the court
A bill was filed in the superior court of chancery, against the Mississippi Railroad Company, under the act of 1844, which act provided for placing said company in liquidation for the benefit of creditors. Under a prayer in the original bill, the complainant was appointed a receiver, with power to take possession of the notes, and other evidences of debt, and to sue for and collect all moneys due the company. By virtue of that appointment, this bill was filed in the district chancery court, to recover of the respondent the amount he had subscribed to the capital stock of the company. The respondent demurred, and the demurrer was allowed.
The liability of the respondent on his subscription, as it originally existed, was purely legal in its character. He was liable to be sued at law, by the corporation, for the amount lie had subscribed, although the charter may have contained a clause providing for a forfeiture of the stock, on failure to pay. The remedy by forfeiture and sale is but cumulative. Ang. & Ames on Corp. 293, 310-11.
The question then is, can the complainant sue in his own name, in equity, to recover a debt which, as between the original parties, was recoverable only at law ? The appointment of a receiver, in this case, was not made under any provision in the statute under which the proceeding was instituted against the bank. In case of a voluntary surrender of the franchise, the act authorizes the governor to appoint two commissioners to wind up the affairs of the bank, one of whom should be nominated by the stockholders. But, if a voluntary surrender was not made, then the act required the attorney-general to proceed, by bill in chancery, to have the charter vacated, but two commissioners were still to be appointed by the governor. The commissioners were empowered to receive all the assets and property of the bank, and to collect the debts by suit or otherwise. If the charter has been declared forfeited, the commissioners are the proper persons to collect the debts, and not a receiver appointed pending litigation. But whether a forfeiture has been declared, does not appear. But if the receiver is still invested with power, he is not authorized to sue in chancery, for the collection of a purely legal demand. Indeed, no case has been found, in which a receiver has been permitted to sue, except at law, in the action of ejectment, on leave granted by the court for that purpose. 2 Haddock's Ch. 243; 1 Smith's Ch. Prac. 638. He is but an officer of the court, appointed to hold a fund pending litigation, or infancy. But if he can sue at all, it must be in the name of the party having the legal right; and the authority to sue does not convert that into an equitable right which was before purely legal, or he could not bring ejectment. If he is to be regarded as the assignee, he should sue at law, of course, on mere legal demands. And if he is considered as trustee, it is the same thing, for a trustee may sue at law.
But, does the receiver derive power to sue, in this instance, from the order of his appointment? It is alleged in the bill, that he is authorized to sue for and collect all moneys due the company. Admitiing that this order conferred the power to sue, it only gives the power to be exercised according to the appropriate remedy. The chancellor could not convert remedies from legal to equitable. If he could confer the power to sue, he could confer it to be exercised as well at law as in equity.
Decree affirmed.