Case Name: FIRST NATIONAL BANK OF LARAMIE ET AL. v. COOK, AS RECEIVER, ET AL.
Court: Supreme Court of Wyoming
Jurisdiction: Wyoming
Decision Date: 1904-04-25
Citations: 12 Wyo. 492
Docket Number: 
Parties: FIRST NATIONAL BANK OF LARAMIE ET AL. v. COOK, AS RECEIVER, ET AL.
Judges: Knight, J., and Potter, J., concur.
Reporter: Wyoming Reports
Volume: 12
Pages: 492–547

Head Matter:
FIRST NATIONAL BANK OF LARAMIE ET AL. v. COOK, AS RECEIVER, ET AL.
Proceedings in Aid of Execution — Appointment, Duties and Powers of Receiver — Jurisdiction—Claims of Third Parties— Rights of Parties with Mortgages and Liens upon Property of Judgment Debtor — Practice.
1. By the statutory proceeding in aid of execution (R. S-, Secs. 3932-3957), a summary method is provided of discovering property subject to plaintiff’s execution and applying it thereto when discovered; but the taking over and conducting of defendant’s business, the marshaling of liens, and the settlement of disputed titles are foreign to the proceeding.
2. Existing liens upon the property of the judgment debtor are not displaced or affected by the appointment of a receiver in the statutory proceeding in aid of execution.
3. The receiver appointed in proceedings in aid of execution succeeds only to the title of the judgment debtor, and as to property incumbered by liens he has only such rights as the judgment debtor had at the time of the appointment.
4. Proceedings in aid of execution provided by statute are summary, and, in such proceedings, disputes between the debtor and third persons cannot be settled, nor the collection of claims enforced by an order of payment and attachment; the receiver must resort to his appropriate' action for the purpose.
5. The powers and functions of a receiver appointed in a proceeding supplementary to execution under the statute are limited by the purposes of the statute under which such appointment is made, viz.: to demand and sue for, under the order of the court, and to take into his possession ’ money, property, and interests of the judgment debtor, and apply them to the satisfaction of the judgment.
6. Persons holding liens upon the property of the judgment debtor, not parties to the main suit nor the supplementary proceedings, except by intervention in the latter to enforce their claims, are not concerned with the appointment of a receiver in the supplementary proceedings, and are not in a position to complain of such appointment.
7. A lienor not a party to the main suit nor the supplementary proceeding, except by intervention to enforce his claim, is not estopped from objecting to the possession and control of the receiver of the property of the judgment debtor subject to the lien, from the fact that he consented to the receiver’s appointment; such appointment concerning only the parties to the original action, and the lienor testifying that he did not understand the receiver was to take his property.
8. In proceedings supplementary to execution, under the statute, the court has no authority to order property applied to the satisfaction of the judgment unless the title of the defendant thereto is clear and undisputed.
9. A third party claiming an interest in the property of the judgment debtor has the right to have the issue tried in the regular, ordinary way, rather than in the summary supplementary proceeding, and to have the protection of a trial by jury in cases where the right to a jury trial is secured.
10. Though the legislature might provide for the determination of all conflicting claims in the supplementary proceeding, authorizing issues to be formed therein and submitted, the present statute makes no such provision and confers no such jurisdiction.
11. In the statutory supplementary proceedings brought by a judgment creditor it was not competent for the court to take under its control the real and personal property of the defendant partnership, connected with their ranch and cat- tie business, and administer and conduct such business through its receiver appointed in such proceedings, and thereby prevent third persons holding liens upon such property from proceeding to enforce the same.
12. It was not proper for the court to order the sale by the receiver so appointed of cattle or other property of the judg- . ment debtor, covered by the liens of intervening third parties, for the purpose of appropriating the proceeds to the payment of the costs of the supplementary proceedings, the conservation of the property m the receiver’s hands, the other expenses of the receiver, and his compensation; such lienors not having been parties to the action, and not having consented to the custody of the receiver, and the order made by the court which was the only order authorized by statute, having merely appointed a receiver in the supplementary proceedings of the property of the defendants, without directing him to take charge of the particular property in question, and the claim that the entire beneficial interest in the property resides in the lienors being conceded, unless the judgment creditor is able to establish that such claims are wholly or in part fraudulent.
13. The burden of showing the claims of the lienors to-be fraudulent is upon the judgment creditor, and any steps to establish such fraud should be taken by the receiver appointed at the instance of the creditor in the supplementary proceeding.
14. The court is without authority to adjudicate in the supplementary proceedings the claim of the judgment creditor that the alleged liens of third parties are fraudulent; it is the province of the receiver to institute appropriate actions or proceedings to test the validity of the alleged liens, and hence he was an improper person to be constituted referee to report upon the claims even if competent for the court to make any such reference in the supplementary proceedings.
15. A decree of foreclosure having previously been entered upon the mortgages covering the real property of the judgment debtors, though no sale had occurred under the decree, and the debts secured by the mortgages covering the personal property being overdue, and the conditions thereof forfeited by non-payment, there was nothing to vest in the receiver but the bare possession and a right of redemption.
16. The holders of liens upon the property of the judgment debtor in supplementary proceedings have the same right to enforce their liens as if no receiver had been appointed in such proceedings.
17. The court would be authorized to enjoin the judgment debtor and the lienors from disposing of the property to the detriment of the judgment creditor in any way, except by the enforcement of the liens, and to require the lienors to pay into court or to the receiver, to be applied upon the execution or to the payment of the costs and expenses of the receivership, any residue after the satisfaction of the liens.
18. Sales of part of the property of a perishable nature having-been made by consent of all parties in interest pending the litigation, and the proceeds thereof being in the custody of the court below, the same are approved, and held that such proceeds should be disposed of in conformity to the views expressed in the opinion, subject to any stipulations under which the sales were made.
ON PETITION POR REHEARING.
1. Third parties who are creditors or claimants to the property of the judgment debtor are neither necessary nar proper parties to the statutory proceeding supplementary to execution.
2. Judgment was obtained against a partnership and the members thereof, and a proceeding under the statute instituted by the creditor supplementary to execution to subject the property of the partnership to the satisfaction of the judgment. Held that the proceeding was not a suit or proceeding for winding up the affairs and business of the partnership.
3. A receiver appointed in such a proceeding has no right to sell property incumbered by valid prior liens, so as to divest such liens, for the purpose of paying the expenses incident to his possession.
4. While an order might not have been proper permitting the lienors to take possession of the personal property in the receiver’s possession, unless the latter admitted their right to possession, they should have been permitted to take necessary and lawful proceedings to protect and enforce their liens.
5. The receiver held the property subject to the right of other prior lienors and claimants; and as he had taken no proper proceedings to ascertain the extent of the incumbrances, but held adversely thereto, the lienors should have been permitted to protect themselves by suit against the receiver.
6. The supplementary proceeding is summary, and where the debtor’s property is alleged to have been fraudulently conveyed, or it is subject to the claims or liens of third persons, there is a lack of necessary parties to permit of a proper adjustment of the interests of all parties and the rendition of a decree that will be effectual from a jurisdictional standpoint. In this respect there is a radical difference in practical operation between the statutory proceedings and a creditor’s bill.
7. By the institution of a supplementary proceeding and securing the appointment of a receiver therein, the judgment creditor acquires a lien upon the equitable assets of the debtor, and the receiver becomes vested with power to enforce that lien, and to take all necessary steps to that end; but third parties claiming an interest in the property are not required to submit their claims for adjudication in the supplementary proceeding.
8. The matters involved in the disposal of the proceeds of sales of some of the property under stipulation pending litigation should be heard and determined by the district court; the ■ appellate court not being the proper forum for that purpose.
[Decided April 25, 1904.
Rehearing denied December 31, 1904.]
(76 Pac., 674; 78 Pac., 1083.)
Error to the District Court, Albany County, Hon. Richard H. Scott, Judge of First Judicial District, presiding.
The facts are stated in the opinions.
N. B. Corthell, for plaintiffs in error.
The proceedings taken by the judgment creditor in the District Court and permitted by that court show a radical misconception of the office and nature of receiverships. It is not a device by which rights are created or destroyed, or conflicting claims determined, but an ancillary and provisional remedy rendered necessary by the existence of property or a fund which cannot be otherwise taken care of. A suit pending in a proper court in which, there is a petition or application by one or more parties for relief against others, showing a lawful cause of complaint and a lawful right to recover something is essential. The statutory power to appoint a receiver is strictly construed, and the power of appointment is reluctantly exercised and only after the exhaustion of other and less summary remedies. It must appear that there is property to be cared for, and that it can be cared for by a receiver more advantageously and justly than by any of the parties interested. (23 Ency Law,. 1001-1092; Beach on Rec., Secs. 1, 2, 137, 139, 162, 163, 612, 621, 808, 810; High on Rec., Secs. 1-3, 9, 11; Smith on Rec., Secs. 1-3, 10-13; Pomeroy’s Eq. Jur., 171, 1319, 1330; Sellers v. Stoffel (Ind.), 39 N. E., 52; Plutchinson v. Rice (La.), 33 So., 57; Schaack v. McKay, 100 Ill. App., 294; R. R. Co. v. Soutter, 69 U. S., =Uo; State v. Ross, 122 Mo., 43s; .Minkler v. Sheep Co. (N. D.), 62 N. W., 494-)
A court of equity must act upon established principles and through established channels. (Rees v. Watertown, 86 U. S., 107; Beach on Rec., 609, 615; High on Rec., 403, 439; Tornances v. Melsing, 106 Fed., 775; Pearce v. Jennings, 10 So., 511; Smith on Rec., 146; Williams v. Sexton, 19 AVis., 42; Thompson v. Allen County, 115 U. S., 550.) All the proceedings in the case at bar rest upon the motion and affidavit of the judgment creditor for the examination of Thomas Bird with the incidental request for the appointment of a receiver if the court should so determine. The papers were prepared to secure an examination and disclosure of assets by the managing partner of the judgment debtor. The showing of the affidavit, while probably sufficient for an examination of the debtor, is insufficient to secure the appointment of a receiver, had there been a direct suit for that purpose. Instead of pursuing the statutory remedy and obtaining an order under Section 3951 for the application of particular property toward the satisfaction of the judgment, the creditor asked and obtained an order showing a general appointment of a receiver of all the property of the debtors, under cover of which the receiver seized upon and began to conduct and administer the entire business and all the tangible property of the firm. All of that property could have been seized under execution. The fact that by so doing the Sheriff might have become seriously responsible to third parties is not a sufficient excuse for authorizing him to take possession as receiver in the proceeding instituted by the creditor.
The statutes provide the ordinary legal remedies for enforcing judgments which take precedence over the extraordinary remedies of equity. (R. S., Secs. 3814, 3828, 3852> 3853) 3879-3893; Laws 1901, p. 101; R. S., Secs. 3901-3914, 3915-3924.) The proceedings authorized by statute for reaching property not obtainable under execution are not intended as a substitute for execution, nor to dispense with the usual or orderly proceedings heretofore practiced by courts of law or equity. The object of the proceeding is to compel the application of property concealed by the debtor, or which from its character cannot be levied upon by execution. (Edgerton v. Hanna, 11 O. St., 323; Schloredt v. Boyden, 9 Wyo., 392; High on Rec., 401; Smith on Rec., 146, 148, 150.) Proof by affidavit or otherwise that the debtor has property which he refuses to apply to the judgment simply authorizes the court to begin and conduct an inquiry for the purpose of disclosing such property, and this is the foundation for such further proceedings as are to be found in the ordinary processes and usages of courts. The mode of applying the property which may be discovered is not expressly provided, but it must be in analogy as to claims against third parties to the remedies to which the debtor himself might resort. Disputes between the debtor and third persons cannot be settled nor the collection of claims enforced by an order of payment and attachment. (Edgerton v. Hanna, stipra; Schloredt v. Boyden,. supra.)
The chief end of these proceedings may be said to be the accomplishment, by a sort of legal assignment, of a transfer of property from a judgment debtor to the creditor, which cannot be had otherwise than by the intervention of the court. To authorize the court to appoint a receiver in such a proceeding there should be, (1) a verified application showing where and what the property is and why it cannot be taken upon a writ; (2) the court should make an order describing the property and directing its application to the judgment and the manner of such application, and (3) as incidentad to and consequent upon these proceedings, in an appropriate case and upon a proper and sufficient application where a custodian seems necessary, to appoint a receiver of that propert)^ and direct its delivery to him and perhaps the manner of its disposition. None of these requirements were observed in the case at bar. Section 3954, Revised Statutes, clearly limits the powers of the court and a receiver in summary proceedings to the disposition of interests concerning which there is no controversy and which can be ascertained without litigation. There is no power in such proceedings to solve'all controversies over property, to dispense with litigation, or to justify interference in this form with property of other persons which would be illegal if resorted to by other and better known remedies. (Rodman v. Henry, 17 N. Y., 482; McCoombs v. Merryhew, 40 Mich., 721; Arnold v. Bright, 41 Mich., 207; R. Co. v. Cir. Judge, 31 Mich., 456; Schaack v. McKey, 100 Ill. App., 294; Hutchinson v. Rice (La.), 33 So., 57; Silverman v. Kuhn, 53 la., 436; 5 N. W., 523, 535; Rees v. Watertown, 86 U. S., 107; Thompson v. Allen Co., 115 U. S., 55° 1 R- R- Co. v. Soutter, 69 U. S., 510.)
If the receiver’s appointment had been avowedly made for the purpose of administering and disposing of the property or interests of the plaintiffs in error or other third persons sui 'juris, either for their express benefit or other- . wise, in invitum, it would have been clearly illegal and void,, ■ though there were express statutory authority therefor. (Ap- j peal of Ervine, 16 Pa. St., 256; Gossom v. McFerran, 79 Ky., 236; Gilpin v. Williams, 25 O. St., 283, 298; Burke v. Mechanics’ Sav. Bk., 12 R. I., 513; Johnson v. Branch, 9 S. D., 116; 68 N. W., 173; Ames v. Port Huron Co., 11 Mich., 139; Johnson v. Hudson, 96 Tenn., 630; 36 S. W., 380.) There was nothing in the order of the court appointing the receiver from which any such purpose or intent can be gathered.
A first mortgagee is entitled through a receiver appointed at his suit pending litigation to the custody of the property. (Anderson v. Matthews, 8 Wyo., 513.) Can it be that a junior mortgagee, much less a judgment creditor, with no specific lien and without any suit pending- for the marshaling of liens or the appropriation of the property by lawful remedies to the satisfaction of his debt, can suspend the right of foreclosure by advertisement and sale, the rig'ht to issue execution and sell under a judgment establishing a mortgage lien, the right to the possession of the property and its income so far as it may be necessary to pay prior contract liens, and by a receivership charge the expenses thereof upon the property or fund, so that the proceeding may be set on foot and maintained not only in defiance of the rights of the owners and lienors, but at. their expense ?
The order appointing the receiver was without jurisdiction because there was no sufficient application nor a finding by the court that the judgment debtors had property applicable to the judgment, describing the same, and there was no designation by the court in its order of the duty of the receiver. It was the plain duty of the court to give the plaintiffs in error a hearing upon their petition and permission to enforce their claims. The application of plaintiffs in error is the usual method adopted to the orderly enforcement of such rights. (17 Ency. PI. & Pr., 786, 791-3; Minot v. Mastín, 95 Fed., 739; Cohen v. Min. Co., id., 583; Riggs v. Whitney, 15 Abb. Pr., 388; Wheeler v. Walton, 64 Fed., 664; Winchester v. Davis Co., 67 Fed., 45; Beach on Rec., 229; High on Rec., 39, 685.) The contract right of foreclosure of a mortgage cannot be altered, burdened, suspended or stayed even by a statute subsequent to the contract. The essential qualities of the remedy contracted for are a part of the application of the contract itself. (Phinney v. Phinney, 81 Me., 450; Boice v. Boice, 27 Minn., 371; O’Brien v. Kreutz, 36 Minn., 136; Baldwin v. Flagg, 43 N. J. R., 495; Assn. v. Hardy, 86 Tex., 610.) And that which cannot be done by law directly cannot be done without law or against law by any court or board pretending to exercise the authority of law. (Com’rs v. Burns, 3 Wyo., 691.) The effect of the denial of the application of the plaintiff in, error, bank, was to supercede the previous judgment of foreclosure against the lands and a suspension of the contract and statutory right of possession and foreclosure as to the personal property under the mortgages of plaintiffs in error where the right had not been legally questioned in any manner. Moreover, the effect of the order while denying the hearing was to proceed as though a hearing had been had adjudging the right in favor of the receiver and against .the plaintiffs in error, not after but before an inquiry. This is not the kind of case in which the expenses of receivership are payable out of the property in his hands. The receiver acquired only such right as the judgment creditor had and his appointment did not affect or impair the rights of third parties or existing liens, and a sale by the receiver could not divest or impair such rights. (Beach on Rec., 8, 218, 639; Smith on Rec., 34, 68; Hig'h on Rec., 138, 302, 348-9, 424, 440, 495; 23 Ency. Law, 1084-92; Moran v. Sturgis, 154 U. S., 256; Kneeland v. L. & T. Co., 136 II. S., 379; Snow v. Winslow, 54 la., 200; Barren v. Mullen, 21 Minn., 374; Manning v. Monaghan, 23 N. Y., 539-)
With the exception of a class of cases affecting railroads, waterworks and other quasi public corporations, where upon grounds peculiar to that class of institutions, where the proper parties are before the court and upon suitable proceedings, the business of such corporations are operated under a receiver for a limited time, the costs and expenses of a receivership cannot in general be paid out of property or a fund owned by a stranger to the suit or subject to a prior lien in favor of persons who are not parties to the litigation and for whose benefit a receiver has not been asked. (Lammon v. Giles, 3 Wash., 117, 123; Bradford v. Cooledge, 30 S. E., 579; Tome v. King, 64 Mel., 166; Howe v. Jones, 66 la., 156; St. Louis v. Light Co., 11 M. App., 237; Sneed v. Wagnaur, 27 Mo., 176; Hotch-kiss v. Maskell, 87 Ill. App., 623; Iron Const. Co., 19 N. Y. App. Div., 415; Riggs v. Whitney, 15 Abb. Pr., 388; Cooper v. Shirley, 75 Fed., 268; Hanna v. Tr. Co., 70 Fed., 2; Assn. v. Alderson, 90 Fed., 142; Ephriam v. Bank, 129 Cal., 589; Highly v. Dean, 168 Ill., 266; Joslyn v. Athens Co., 43 Minn., 534; Moore v. Lincoln Park, 196 Pa. St., 519; Jones on Corp., 534; Sav. Bk. v. Cir. Judge, 98 Mich., 173; Wheeler v. Walton, 64 Fed., 664; Trust Co. v. R. R. Co., 100 Fed., 899; Nat. Bk. v. Boyne, 140 N. Y., 321;' Cutter v. Pollock (N. D.), 76 N. W., 235.) The plaintiff or the party who sets the receivership in operation must in such case respond for the receiver’s costs and expenses. (Howe v. Jones, 66 la., 156; Tome v. King, 64 Md., 166; R. S., 3956.)
This controversy seems to have narrowed into a mere question of costs and expenses of the receiver. The courts never retain a receiver merely for his benefit, but here the receiver seems to have assumed the entire burden of the litigation.
It was error for the court to order the sale of some of the cattle for the purpose of paying the expenses of the receivership. Whether the court erred or not in appointing a receiver in the first place, it was not justified in proceeding in the matter of the sale except after a hearing and a determination of the rights of the claimants. (Windsor v. McVeigh, 93 U. S., 274; Collins v. Meyers, 68 Ga., 530.) The judgment debtor has in fact nothing but an equit)^ of redemption in any of the property. The receiv er’s appointment does not enhance the value of' the property nor change the order of priority of the lienors. If the plaintiffs in error have the right to possession, they are entitled to obtain the same by replevin or otherwise. In this case the judgment creditor is not only depriving the plaintiffs in error of their remedies, but he is resorting to a remedy to which he is not entitled. (Congdon v. Lee, 3 Edw. Ch., 304; LeRoy v. Rogers, 3 Paige Ch., 334; Bank v. Cir. Judge, 43 Mich., 292; Min. Co. v. Min. Co., 106 Ala., 492; Furnace Co. v. Iron Co., 96 Ala., 472; Rodman v. Harney, 102 N. C., 1; Elwell v. Goodnow, 71 Minn., 383.)
Herman. V. S. Grocsbeck, for defendants in error. •
. The power to appoint a receiver vested in the District Court under Sections 4034, 3940-3956, R. S. The purpose of supplementary proceedings is to furnish a simple and inexpensive substitute for the equity proceedings in discovering and applying property of a debtor which cannot otherwise be reached. The creditor acquires a lien by such proceeding upon the equitable assets of the debtor, to perfect which he must obtain an order directing the property to be applied to the judgment, or the appointment of a receiver. The creditor first instituting' such proceedings has preference. His rights will not be affected by an assignment of the property or a subsequent bankruptcy of the debtor. (24 Ency. Law (1st Ed.), 600, 614, 635, 656-7.) The validity of the receiver’s appointment cannot be tested collaterally; the j udgment debtor only can avail himself of any irregularity in the proceedings. Consenting- to the appointment or failing to seasonably object thereto will constitute a waiver. (Id., 689, 690.) The receiver representing the debtor is also trustee for the benefit of the creditor upon whose application he has been appointed or for whom the receivership has been expended, but not for the benefit of all creditors. An order appointing a receiver of certain property of the judgment debtor is an adjudication that the same is not exempt and will be full protection to the receiver for acts done in conformity therewith while in force. (21 Ency. PI. & Pr., 181, 193.) The plaintiff in error cannot by intervention object to the receiver’s appointment. • (17 Ency. PI. & Pr., 695, 697, 718, 721, 757, 785-7, 791-2; Greeley v. Sav. Bank (Mo.), 15 S. W., 429; Sands v. Greeley, 80 Fed., 195; Greenawalt v. Wilson, 52 Kan., 109; Gallagher v. Gingerich, 74 N. W., 763; Egbert v. Assn., 9 O. S. & Cp., 646; Kneeland v. Trust Co., 136 U. S., 89; Anderson v. Matthews, 8 Wyo., 513.)
The appointment of a receiver in supplementary proceedings as authorized by Section 3952, R. S., can'mean nothing less than a receivership of all the property of the judgment debtor. The plaintiffs in error by their laches in the enforcement of their judgment and liens ought not to complain of the diligence of the judgment creditor in this case. The sole question in the case is whether or not the court had jurisdiction of the subject matter. It clearly had jurisdiction for the reasons above stated, and it was only necessary that the order should appoint a receiver of the property of the judgment debtor without designating particular property. (Ward v. Petrie, 157 N. Y., 301.) And thereupon the receiver was entitled to take into possession all of the debtor’s property not exempt from execution. The fact that there may be pretended liens was examined by the court and it undoubtedly appeared that there was property in excess of the amount of the liens, if an3r. Lienors and judgment creditors have no right to forever hold their liens as a menace to other unsecured judgment creditors and thus prevent them from diligently enforcing their rights. Upon the matter of jurisdiction in cases like this, see Cameron v. Imp. Co., 21 Wash., 169, and note to Lathrop v. Clapp, 100 Am. Dec., 500, 512.
The plaintiffs in error waived any irregularity, if any, in the receiver’s appointment by acquiescing therein when they asked permission of the court to enforce their securities. Their only contention then was as to the compensation to be allowed the receiver upon his application to sell certain personal property for the purpose of converting the property and paying the expenses incident to the trust. They never objected to the receiver’s appointment, and Mr. Crumrine, one of the plaintiffs in error, it appears, urged the appointment. The receiver obtained the order and sold the property some five days thereafter, before these proceedings in error were instituted. The laches of the plaintiffs in error is manifest throughout the entire case. (Bank v. Braithwaite, 7 N. D., 358.)
The claim is untenable that the appointment of the receiver was improper because the property could have been taken on execution. By the examination and receivership provided by law all the property could be reached. Moreover, it would have been impossible to have appraised the value of the property or to secure purchasers for it with the apparent mortgages and liens on record, and the court will not compel the doing of a vain thing. The order appealed from was not a final order. (R. S., 4247; Anderson v. Matthews, 8 Wyo., 307; 2 Ency, PI. & Pr., 78.) The order for the sale of the property appealed from is merely interlocutory, not affecting the subsequent rights of the adverse parties. The property sold under the order was only claimed by the bank, and it has proceeded by replevin to protect its interests. There is, therefore, no necessity for the appeal. This is shown by affidavits filed on the motion in this court to stay proceedings.
In such a case as this the receiver is entitled to compensation and for the expense of preserving the property. (Trust Co. v. Coal Co. (Colo.), 60 Pac., 621; Merriam v. Min. Co. (Ore.), 60 Pac., 997; O’Donnell v. Bank, 9 Wyo., 408; Anderson v. Matthews, 8 Wyo., 513; Beck-with v. Carroll, 56 Ala., 12; Inv. Co. v. Portland (Ore.), 67 Pac., 194; Kneeland v. Trust Co., 136 IT. S., 89; Ellis v. Ice Co., 86 Tex., 109; Hoffman v. Bank (N. D.), 61 N. W., 1031; Grant v. Ins. Co., 120 U. S., 271; Hembree v. Dawson, 18 Ore., 474; Greeley v. Bank (Mo.), 15 S. W., 429; Land Co. y. Bindie (Tex.), 32 S. W., 582; Iron •Co. v. Blevins, 34 S. W., 828; Sands v. Greeley, 80 Fed., 195; Trust Co. v. R. R. Co., 85 Fed., 390; Electric Co. v. Ry., &c., Co., 84 Fed., 740; Gallagher v. Gingerich, 74 N. W., 763 ; Gas Co. v. Foster, 99 Fed., 495 ; Davis v. Shearer (Wis.), 62 N. W., 1050; Jones v. Blum, 145 N. Y., 333; Smith v. Hopkins, 10 Wash., 77.) It is only when a party improperly seeks the appointment of a receiver that he should be required to pay the expenses of the receivership. (Myers v.. Frankenthal, 55 Ill. App., 390; Highley v. Deane, 64 id., 389; Cake v. Mohun, 164 U. S.-, 311.)
On Petition for Rehearing. There does not appear to be in the record any application in writing by which the plaintiffs in error sought to enforce their liens; this is a fatal omission. The sale of the cattle under the order was not for the purpose of carrying on the business of the partnership, but to create a fund for the payment of the expenses of administering the trust, there being no funds of the partnership in the hands of the receiver. The entire object of the receivership was to settle the affairs and concerns'of an insolvent co-partnership, and this would have been done speedily and economically if the receiver had not been interfered with. The property should have been sold, all just liens satisfied, and the entire matter settled by one simple, direct and speedy proceeding, without encumbering the estate with the expenses of foreclosure proceedings in three or four different actions. If the plaintiffs in error had pursued their remedies long* before the appointment of a receiver there would have been no trouble. A receiver is the same whether he acts upon the application of a creditor in an action where all other creditors are parties, or in supplementary proceedings. He becomes a trustee, not only for the creditor making the application, but of other creditors and stockholders. (Gillett v. Moody, 3 N. Y., 479; Talmadge v. Pell, 7 N. Y., 347; Davis v. Gray, 16 Wall., 203.) A court appointing a receiver acquires certain rights and assumes certain obligations, and the expenses which the court creates in the discharge of those obligations are burdens on the property taken pos session of, irrespective of the question who may be the ultimate owner, or who may have the preferred lien, or who may invoke the receivership. (Kneeland v. Trust Co., 136 U. S., 89; Ry. Co. v. Bledso (Tex.), 20 S. W., 1135.) The receivership in this case is somewhat analogous, to that of a receivership of railway corporations and mining companies, where the business may be and ought to be carried on for a limited period in order to protect the interests of all concerned. No hazards of a mercantile business are incurred or contemplated. The court has the power to make the expenses of the receiver chargeable on the property in his hands, though the right should be exercised with caution. (Gillan v. Nussbaum, 95 Ill. App., 277.) Although, generally, a court of equity cannot without the consent of all lien creditors authorize the receiver of an insolvent private corporation whose business is not affected with any public interests to issue certificates which will be a paramount lien on the property for the purpose of carrying on the business of the corporation, yet it will be done when it is necessary to preserve the property or franchises. (Ins. Co. v. Iron Co., 68 Fed., 623.) A receiver may for good cause shown be permitted to continue a partnership business until a sale of the property or the end of the litigation. (23 Ency. Raw (2d Ed.), 1019', 1119.) The compensation of the receiver, however appointed or for what purpose, should be allowed where it is necessary to conduct the busi- ■ ness in order to avoid loss or depreciation of the property during receivership. Such compensation allowed should not be narrowed to what it would have cost the judgment debtor, as the lienors have been guilty of laches and neglect in not promptly enforcing their claims. The compensation is discretionary with the court. (Stuart v. Boulware, 133 U. S., 78; Mann v. Poole (S. C.), 26 S. E., 229; Iron Co. v. Blevins, 34 S. W„ 828; Land Co. v. Bindle, 32 S. W., 582; Reinhart v. Min. Co., 94 Fed., 901.)
The matter of granting or refusing leave to enforce liens is addressed to the discretion of the court; and such dis cretion is not subject to review unless it has been abused. The court ordered the receiver to report as to the validity and'justice of the claims, and if he reported adversely then they were allowed to bring actions against the receiver. This was not a final order that was prejudicial to the plaintiffs in error because they should have awaited the receiver’s report, and there has been no ruling adverse to them upon their liens, but merely a reference to the proper party as a master to ascertain their apparent justice and validity, whereupon the matter could be reviewed by the court. The court followed the usual practice in such cases. (AViswall v. Sampson, 14 How., 52; 17 Ency. PI. & Pr., 785; Mor-rill v. Noyes, 56 Me., 458; People v. Life Ins. Co., 79 N. Y., 267; Att. Gen. v. Ins. Co.,' 4 Paige, 224; McRae v. Dredging Co., 86 Fed., 344; In re Mackwirth, 15 App. Div., 65; Wheeler v. Walton Co., 65 Fed., 720; Meeker v. Sprague, 5 Wash., 242; Preston v. Laughran, 58 Hun, 216; 23 Ency. Law (2d Ed.), 1093; Barton v. Barbour, 104 U. S., 126; R. R. Co. v. Cox, 145 U. S'., 593; Porter v. Sabin, 149 U. S., 473; Andrews v. Iron Co., 7 N. P. (Ohio), 237; State v. Scott, 82 N. W., 320; 60 Neb., 98; Hyndman v. Field, 101 Ky., 147; 22 Ency. Law, 1093-4; Sands v. Greeley, 80 Feck, 195.) The order being discretionary, appeal will not lie. (2 Ency. PI. & Pr., 78-80, 89.)
Proceedings for appointment of the receiver were taken on January 5, 1903, and possession was taken on January 7th; the order for the sale was made about January 22d, and the order of the commissioner granting leave to enforce securities was made on the 24th. This delay was unreasonable, and should be held tantamount to the consent and acquiescence in the appointment. (Brown v. Iron Co., 134 U. S., 535; Allen v. R. R. Co., 3 Woods, 316; Gypsum Co. v. Adsit, 105 Mich., 497; Rumsey v. R. R. Co., 154 Mo., 215; In re Purifier Co., 86 Mich., 149; ’ Hardt v. Levy, 79 Hun, 348.)
Upon the whole case we think the court has misconceived the scope of this salutary statute, which is remedial in char acter and which has been properly invoked in this action by a diligent creditor. The point that the court or Judge is not authorized to settle disputes between the debtor and third persons applies merely where the Judge may order property or earnings of the debtor to be applied' on execution without the appointment of a receiver and where the debtor has confessed upon his examination that he owns such property. We cannot see that it has any bearing upon the administration of a receivership.

Opinion:
Corn, Chief Justice.
M. E. Stowers, one of the defendants in error, obtained a judgment, in the District Court of Albany County, against the firm of Bird Bros, for the sum of $1,186 and $9.50 costs. An execution was returned wholly unsatisfied and, upon the motion of the judgment creditor, Thomas Bird, the managing partner was ordered to appear and answer concerning the property of the firm, as provided by the statute in regard to proceedings in aid of execution. Upon his answer, the court appointed the defendant in error, Alfred Cook, who was then and is now Sheriff of the county, a receiver of the property of the judgment debtor, and he proceeded to take into his possession and control some fifty thousand dollars' worth of property, consisting of 4,437 acres of land, 341 tons of hay, 31 head of horses, 669 head of cattle and a large amount of ranch machinery and implements. It is alleged that all the property is covered by mortgages and other liens to its full value and is insufficient to pay the indebtedness secured upon it. And this seems to be conceded by the judgment creditor, but he insists that the liens, or some part of them, are fraudulent. The receiver reported that he was without funds and, upon his application, the court made an order authorizing him to sell fifty head of fat cattle at private sale, in order, as stated in his application, "to create a fund for the maintenance and care of the said property, the marshaling of assets and liabilities thereof, for the payment of services of custodians and conservators employed by him wherever necessary, to secure abstracts of title and report on all existing liens on the same."
The lienors, the plaintiffs in error here, were not made parties to this action and, so far as we can discover from the record, received no notice from the judgment creditor, or the receiver, of these proceedings. The)'-, however, intervened by petitions setting up their claims, alleging that the property was insufficient to pay them, and praying for leave to enforce their liens and that the receiver be ordered to turn over possession of the property to them for that purpose. These applications were denied by the court and the matter of their liens referred to the receiver with directions to examine into them and report his recommendations to the court. The lienors filed their petitions in error in this court, asking at the same time for a stay of execution, which was granted, an undertaking for the purpose being filed as required. They also made application for a writ of prohibition restraining the District Court from further proceedings with reference to the encumbered property. An alternative writ was also allowed, and the matter was submitted and is now pending before this court upon a demurrer to the petition. In the meantime, the receiver had disposed of the fifty head of cattle at private sale for the agreed price of $1,125, the real value as alleged being not less than $1,750.
It is apparent that the proceedings in this case were instituted under the provisions of Chapter 2, Division 3, of Title 7, of our statutes, entitled, "Proceedings in Aid of Execution." And the substantial question presented upon this record is whether it is competent for the court to take under its control the property and business of the partnership of Bird Bros, and administer and conduct the same by its receiver, as has been attempted in this case.
In the case of railroads, and like properties, courts of chancery exercise jurisdiction to continue the operation of the business, and mortgage and other liens are often subordinated to the charges and expenses of the receiver ship. But this is upon the specific ground that the public interest and convenience require that the business should be continued, and the reason does not apply to the property of individuals and to merely private enterprises, charged with no such duty to the public. In High on Receivers, Section 480 (3d Ed.), the author says: "It is important to bear in mind, in considering the subject of receivers in partnership cases, that it is not the province of a court of equity to conduct the business of a co-partnership, and while a receiver may be directed to continue the business a sufficient length of time to enable the court to determine the rights of the parties litigant, it is not the province of the court to become the superintendent and manager of the private business of parties." And in Allen v. Hawley, 6 Fla., 164, in which the authorities upon the subject were considered in some detail, the court say: "As it is not the province of the court to create a partnership, so it is equally foreign from its functions to conduct its business. It never could have been contemplated that a court of chancery should become the superintendent of the private affairs of individuals. Its legitimate province is to adjust the rights and settle the disagreements of parties growing out of such transactions." Cases have arisen where the business of a partnership has been continued temporarily pending litigation with reference to the rights of the parties, but only for special reasons such as the preservation of the good will, so that its full value may be realized by the partners at a final sale and to prevent great loss to the parties. (High Receivers, Sec. 481.)
It is equally well settled that, except in the special cases and for the special reasons above referred to, mortgage, and other liens, cannot be subordinated to the charges and expenses of the receivership. Generally the receiver takes the property of the debtor subject to all liens attaching thereto at the time of the appointment. (Smith Receiv., Sec. 68.) As stated in the case of Hotchkiss v. Makeel, 87 Ill. App., 628: "The power to subordinate the lien of a mortgage to the charges of a receiver has been frequently-exercised by equity courts in recent years, in the case of mortgages of railroads, and other properties impressed with a public duty, and in one case (Beckwith v. Carroll, 56 Ala., 12), and probably in other analogous cases where growing crops were involved, the receiver was considered to have created the very property over which the receivership extended.
"But, wherever exercised, it has been because of the peculiar character of the property. A mortgage is a contract obligation, and is as sacred as any other contract; and anything that destroys or impairs its lien destroys or impairs a contract.
"The reason that supports the excepted cases of railroads and some other business properties is that, they being charged with a duty to the public that is superior to any private obligations, the mortgage owner has knowledge when he invests that his security is liable to be displaced in favor of that first obligation. In no well considered case that we know of has the power been exercised to the subversion of the right of a prior mortgagee of purely private property, unless for very peculiar reasons."
Even in the case of railroads, the power is exceptional, and the Supreme Court of the United States say upon the subject: "Upon these facts we remark, first, that the appointment of a receiver vests in the court no absolute control over the property, and no general authority to displace vested contract liens. Because in a few specified and limited cases this court has declared that unsecured claims were entitled to priority over mortgage debts, an idea seems to have obtained that a court appointing a receiver acquires power to give such preference to any general and unsecured claims." And they add: "It is the exception and not the rule that such priority of liens can be displaced. We emphasize this fact of the sacredness of contract liens, for the reason that there seems to be growing an idea that the chancellor, in the exercise of his equitable powers, has un limited discretion in this matter of the displacement of vested liens." (Kneeland v. American Loan Co., 136 U. S., 97; International Trust Co. v. United Coal Co., 60 Pac. (Colo.), 621; Merriam v. Victor Min. Co., 60 Pac. (Ore.), 997.)
These principles, applied to receiverships generally, are specially applicable to receiverships under our statute with reference to proceedings in aid of execution. From the very nature of the proceedings, the scope of the receivership is very narrow. In this case the suit in which the appointment is made was brought for the recovery of money due from the defendant to the plaintiff upon a promissory note and for ,no other purpose whatever. None of the grounds upon which the. interference of courts of equity by the appointment of a receiver is based are stated, or attempted to be stated, and the mortgagees and other lienors are not made parties. The statute, under and by virtue of which the appointment is made, provides a summary method of discovering property subject to the plaintiff's execution and applying it to that purpose when discovered. No other purpose or object is discoverable in its terms, and the taking over and conducting of the defendant's business, the marshaling of liens and the settlement of disputed titles are foreign to the proceedings. As said by the Supreme Court of Ohio, from which state our statute is taken: "In this summary proceeding, disputes between the debtor and third persons cannot be settled, nor can the collection of claims be enforced by an order of payment and attachment. When there are such claims to be collected, the appointment of a receiver is the proper course, who, if payment be not made, will resort to the proper remedies." (Edgarton v. Hanna, 11 O. St., 324.)
While the statutes of the various states providing for such proceedings differ in their details, certain general principles applying to the appointment and powers of receivers, in such cases, are well settled. As already mentioned, existing liens are not displaced or affected by the appointment. And when property of the judgment debtor is in the hands of a third person, under a valid transfer, or where the debtor has placed on such property a bona fide lien or incumbrance, the receiver's possession is subject thereto, or in other words, as to such property the receiver succeeds to such rights only in such property as the judgment debtor had at the time of his appointment. (Smith Receivers, 154.') It is a summary proceeding and disputes between the debtor and third persons cannot be settled, nor can the collection of claims be enforced by an order of payment and attachment. The receiver must resort to his appropriate action for the purpose. (Schloredt v. Boyden, 9 Wyo., 392; Edgarton v. Hanna, 11 O. St., 323; High Rec. (3d Ed.), 457.) Of similar provisions in Indiana that court say: "They institute a summary mode of ascertaining what property a judgment defendant may have in his possession, or under hi's control, or in the possession of others, subject to execution, and also the debts, if any, that may be owing to him. These are the only subjects of inquiry. No authority is given for making third persons defendants for any other purpose than to answer as to any property held by them belonging to the judgment defendant, or as to their indebtedness to him. The court or Judge has no power, in this form of procedure, to adjudicate and settle controverted questions of right between the judgment debtors and third parties, nor to set aside a sale or conveyance of property by the debtor on the alleged ground of fraud. Such questions must be tried in another form of action." (Burt v. Hoetinger, 28 Ind., 218.) In so far as an order seeks to determine conflicting claims of title, or to require the delivery of property adversely held, or to authorize the receiver or other officer to take possession of it, it is beyond the jurisdiction of the court and void, and a writ of prohibition may issue to prevent action being taken under it. (Freeman Ex., Sec. 418; McDowell v. Bell., 86 Cal., 615.)
In view of these principles, we think it is clear that the court has in some of its orders exceeded its authority. But the plaintiffs in error, while not formally assigning it as error, make some slight contention that the appointment of the receiver in the first place was improper and erroneous. We think, however, that so far as the appointment is concerned, the plaintiffs in error are not in position to complain. The statute authorizes the appointment, they were not parties to the suit or to the supplemental proceedings, and it is a matter in which they have no interest or concern. For the same reason the suggestion of defendant in error that Crumrine, one of the plaintiffs in error, is estopped from objecting to the possession and control of the property by the receiver from the fact that he consented to the appointment, is without force. He testifies that while he consented to the appointment he did not understand that the receiver was to take his property. And we think it was a matter which concerned only the parties to the original action and with which the plaintiffs in error had nothing whatever to do. (Tyler v. Willis, 33 Barb., 331; Underwood v. Sutcliffe, 10 Hun., 456; 24 A. & E. Ency., 689.) But in so far as the court has undertaken to conduct the business of the defendant partnership, as in the case of a railroad or other business charged with a public duty, its action was erroneous. The powers and functions of the receiver are limited by the purposes of the statute under which he was appointed; that is, to demand and sue for, under the order of the court, and to take into his possession money, property and interests of the judgment debtor and apply them to the satisfaction of the judgment.
The receiver, by his appointment, succeeded only to the title of the judgment debtor and as to property encumbered by liens he has only such rights as the judgment debtor had at the time of the appointment. (Smith Rec'vrs., 267; Voorhees v. Seymour, 26 Barb., 583; Gardiner v. Smith, 29 Barb., 74.) In this proceeding the court has no authority to order property to be applied to the satisfaction of the judgment unless the title of the defendant thereto is clear and undisputed. The question has generally arisen upon the answer of a garnishee who claimed to be the owner of, or to have some interest in, the property sought to be applied, and it has, we think, been uniformly held under statutes like ours that the disputed claims cannot be adjudicated in this summary proceeding. (41 N. J. L., 269; Bostwick v. Monck, 40 N. Y., 383; Rice v. Whitney, 12 O. St., 360; 21 Ency. Pl. & Pr., 139.) The person claiming an interest has the right to have the issue tried in the regular, ordinary way, rather than by a summary proceeding, and to have the protection of a trial by jury in cases where the right to a jury trial is secured. Doubtless, as said in Freeman on Executions, "It is competent for the Legislature to provide for all this in the original action, and to authorize issues to be formed therein and submitted on allegations, express or implied, to the jury, and a final judgment to be entered on their verdict." (Freeman Ex., p. 2230.) But our statute makes no such provision, and that it confers no such jurisdiction has been uniformly held by the courts of Ohio, where it originated. In some of the states the powers and duties of the receiver are pointed out somewhat in detail. But the provision in this State is limited to the bare statement that "the Judge may, by order, appoint the Sheriff of the proper county, or other suitable person, a receiver of the property of the judgment debtor" and directions as to his oath and bond. Doubtless the receiver, under the general statute regulating the subject of receivers, has power to do whatever the court or Judge has authority, in this proceeding, to direct'. But the authority of the court or Judge is very limited, being confined to carrying out the purposes of the statute by the methods which it provides.
These conclusions are emphasized by the fact that every step in the proceedings may be taken before a Judge and the action of the court is not necessary with perhaps a single exception. Where real estate of the judgment debtor, or his interest therein, is sold b}' the receiver, the approval of the proceedings of sale must be b}'- the court m which the judgment was rendered. And even this is only an apparent exception, as the approval is not one of the steps in the special proceeding.
We are further of the opinion that the order of the court directing the sale of cattle, or other property, covered by the liens of the plaintiffs in error, for the purpose of appropriating the proceeds to the payment of the costs of the proceedings, the conservation of the property in the hands of the receiver and other expenses of the receivership and the compensation of the receiver, cannot be sustained. It may be fully conceded that where it becomes necessary to appoint a receiver to preserve property from being wasted, or in any way lost or destroyed, that such receivership being for the benefit of all persons having- an interest in such property, they ought all to contribute to the expenses of the receivership and, as a consequence, that the property itself will be made to pay such expenses. But we think it is not the law nor the practice of the courts that merely because property happens to pass into the hands of a receiver it therefore becomes liable for the expenses of the receivership, in all cases and without regard to the ownership. "If for any reason the order of the appointment is improperly made and is accordingly set aside, it seems unfair to charge the property with the receiver's fees, and, according to the better opinion, the plaintiff himself will be required to pay them." (20 A. & E. Ency., 181.) In French v. Gifford, 31 Ia., 431, the court say: "We think it would be an unjust and inequitable rule if in all cases the receiver should be entitled to his compensation from the fund in his hands without reference to the legality of his appointment. Under the operation of such a rule innocent persons might be made to suffer great loss." And under the circumstances of that case the court charged one-third of the compensation of. the receiver to the fund in his hands and two-thirds against the plaintiff in the action. In Highley v. Deane, 168 Ill., 272, the court say: "Where the receivership is procured under the assertion of an unjust and wrongful claim, as finally found by the court, and the receiver is authorized to take possession of the property of another on such wrongful assertion, the court can protect the injured party by returning the property of which he was divested without its being diminished to pay receiver's charges." In a New York case the order appointing the receiver was reversed on appeal and he was directed to turn over to the defendant all the copartnership property which he held and the plaintiffs were ordered to pay the receiver's compensation. The receiver claimed to have incurred liabilities in the discharge of his trust greater than the amount he had received and urged that he ought not to be compelled to turn his receipts over to the successful party to the litigation and look to the other (who might be irresponsible) for his fees and expenses.
But the court held that so far as the defendant was concerned the appointment was an unauthorized one and not made for his benefit in any manner; it was an invasion of his rights, for which there was no law requiring him or his property to pay the expense; that the same principle would charge property with the fees of officers where it may have been replevied or taken under attachment, and that the same rule would restrain the discharge of a person in custody under an order of arrest until the fees of the officer should be paid. And the court say the law cannot sanction the taking of one man's property in this manner and subjecting it to the expenses or obligations of another. (Weston v. Watts, 45 Hun, 219.) And the courts almost uniformly hold in the case of intervenors that, where the receivership is not requested by them and they obtain no benefit from it, they or their property are not liable for any of the costs or expenses. (Howe v. Jones, 66 Ia., 162; High Rec'vrs., 796, 809; City of St. Louis v. St. Louis Gas Light Co., 11 Mo. App., 241; Matter of Atlas Iron Co., 19 App. Div. (N. Y.), 417; Lammon v. Giles, 3 Wash. Ty., 123.)
The decisions of the courts upon the question have usually been in cases where it has been subsequently determined that the receiver ought not to have been appointed. But where the court ordered certain property to be turned over to the receiver and it was subsequently decided that the receiver had no right to its possession, the New York Court of Appeals say that it was the same in regard to that property as if the receiver ought not to have been appointed and that the fund must be returned undiminished by the receiver's charges. (P. N. Bank v. Bayne, 140 N. Y., 321.)
These principles apply with even greater force to the case under consideration. The plaintiffs in error were not parties to the action; they have never in any way consented to the custody of the receiver, but have protested against it at all times; there was no order of the court directing the receiver to take charge of this particular property, but the only order made, and the only one authorized by the statute, was one appointing him receiver of the property of the defendants in the action. And, furthermore, it is claimed that the entire beneficial interest in the property is in the plaintiffs in error, and this is apparently conceded unless it can be established that the claims, or some part thereof, are fraudulent. The burden of showing such fraud is upon the creditor, the plaintiff in the action, and any steps to establish it should be taken by the receiver appointed at his instance. No such steps have been taken, but instead the claims were referred by the court to the receiver to examine and report his recommendations, it being, as it seems, the purpose of the court to adjudicate the validity of the liens in this proceeding.
As already seen, the court has no jurisdiction in this proceeding to adjudicate these matters. And, as it is the province of the receiver to institute any actions or proceedings, which may be appropriate or desired by -the creditor, to test the validity of the liens, it is clear that he, a necessary party to such proceedings, was not a proper person to be appointed referee, even if it had been competent for the court to make any reference of them in this proceeding.
Furthermore, it appears from the record that suit had been instituted and a decree entered foreclosing the real estate mortgage, though there had- been no sale under such decree; that the indebtedness secured by the chattel mortgages was over due and the conditions were forfeited by non-payment. Under these circumstances, there was nothing- to vest in the receiver but the bare possession and a right of redemption. He succeeded only to such rights as the debtor had at the time of the appointment. (Voorhees v. Seymour, 26 Barb., 583; Gardiner v. Smith, 29 Barb., 74.) As the chattel mortgages contained the customary provision authorizing the mortgagees to take possession whenever they deemed the security unsafe, it is doubtful if the mortgagor had any such right of possession as authorized the receiver to take the personal propeidy at all. (Griswold v. Tompkins, 7 Daly (N. Y.), 215; Gardiner v. Smith, supra.)
But however this may be, the appointment of the receiver did not affect the liens and the holders have the same right to pursue any method of realizing- their claims out of the property upon which they are secured as if no receiver had been appointed, and the court should have required him to turn over the property to the lien creditors for that purpose. Whatever right of possession the receiver may have had at the time of his appointment, it was subordinate to the right of the lienors to take possession whenever the provisions in their conveyances, conferring- the right, became operative. (Bowling v. Garrett, 49 Kan., 504; Righton v. Pruden, 73 N. C., 61; M. & M. Bank v. Kent, 43 Mich., 297.) There could be no possible reason for the court to hold this property in its custody and suspend the right of the lienors to foreclose in the ordinary way except to enable •satisfaction of these with other demands to be made in then-proper order, through the receivership. (Wheaton v. Spooner, 52 Minn., 423.) But, as already pointed out, the -court had no jurisdiction to control or enforce or pass upon the liens in this proceeding. Though we have no doubt of the power and authority of the court to enjoin the defendant and the lienors from disposing of the property in any way to the detriment of the judgment creditor except by the enforcement of their liens and to require the lienors to pay into court or to the receiver, to be applied upon the execution of the plaintiff, or to the payment of costs and the expenses of the receivership, any residue of the proceeds after the satisfaction.of the liens.
The judgment and orders of the court in so far as they have denied to plaintiffs in error the right to enforce their liens in the ordinary way, and the possession of the property for the purpose, and have directed the sale of portions of the encumbered property for the purpose of' obtaining funds to carry on the business of Bird Bros, and to pay the expenses of the receivership, or other costs in the case, must be reversed. Portions of the property have been sold by consent of the parties in interest pending the litigation, such propertjr being in its nature perishable, and the sale being deemed necessary to the conservation of the estate and the proceeds are, as we understand, in the custody of the court. Such sales must be approved and the proceeds disposed of in conformity with the views expressed in this opinion, subject to any stipulations of the parties in interest under which such sales may have been made. Certain expenses have also been incurred by the receiver, under the orders of this court, for cutting and putting up hay on the ranches, and the like, and such necessary expenses are to be paid out of the property and taxed against the parties or persons benefited thereby.
It will be necessary for the District Court to settle the accounts of the receiver, and if, in such settlement, it appears generally that expenses have been incurred or services performed by the receiver in the care or disposition of the encumbered property, and that such expenses 01-services have been to the benefit of the lienors and the amount does not exceed what it would have been necessary for them, or the mortgagor, to pay for the like purposes, the encumbered property ought to pay, or contribute its just share to, such amount.
The judgment is reversed and the case remanded for further proceedings not in conflict with this opinion.
Reversed and remanded.
Knight, J., and Potter, J., concur.