Court Opinion

ID: 7809069
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:10:31.913983+00
Date Added: 2024-06-11T16:30:25.007156
License: Public Domain

McCULLOCH, C. J., (on rehearing). (2) The conclusion is reached hy the majority of the judges that we were in error in holding that the plaintiff was entitled to a judgment against the receiver of a railway company for recovery of damages arising from a tort committed by the railway company before the appointment of the receiver. Such is not the law according to the great weight of authority. There are some cases holding to that view, but the weight of the authority is the other way. See note to Emory v. Faith, 22 Am. & Eng. Ann. Cas., page 586. “It is settled, we think,” said the Maryland court in the case just cited, “by .all the well considered authorities, that an action at law for personal injuries sustained by the alleged negligence of a corporation, prior to the appointment of a receiver, can not be maintained against the receiver subsequently appointed. In other words, a receiver is not liable for a tort committed by ,a corporation prior to his appointment. ’ ’ That is the rule stated by Mr. High in his work on Receivers, section 397, where the rule is stated as follows: “But since a receiver of a railway is not liable to an action for injuries sustained before his appointment and while the road was operated by the company, leave of court will not be granted to bring such action, and the person aggrieved will be left to pursue his remedy against the company.” In the case of Decker v. Gardner, Receiver, decided by the New York Court of Appeals, 124 N. Y. 340, 11 L. R. A. 480, the court said: “He did not represent the corporation, or supersede it in the exercise of its powers, except in relation to the possession and management of the property committed to his charge. Notwithstanding his appointment, the corporation was clothed with its franchises, and still existed. It could still exercise its power, so it did not interfere with the management of the railroad. It could do many corporate acts, and it could do all things necessary to preserve its. legal existence. It could sue and be sued, and was liable for its acts and upon its contracts and covenants the same as if the receiver had not been appointed.” To the same effect see Northern Pac. Ry. Co. v. Heflin, 83 Fed. 93. This court recognized that principle in Ratcliff v. Adler, 71 Ark. 269, but held that a receiver could be sued for damages for the taking of land for right-of-way where it was shown that he continued the wrongful possession of lands originally appropriated by the railway company before the appointment of the receiver. The principle was also recognized by this court in the more recent case of St. L. & S. F. Rd. Co. v. Coy, 113 Ark. 265, where we held that after the appointment of a receiver an action could be prosecuted against a railway company on a cause of action which arose before such appointment. The order of the court which appointed the receiver is not, and could not, be broader than the law itself, and does not attempt to create liability on the part of the receiver where none exists under the law. The order merely contains consent on the part of the court to the maintenance of a suit against a receiver in cases where liability of the receiver is asserted, but does not attempt to create liability on the part of the receiver, and does not authorize suit against him in cases where the corporation itself only was liable. There is, it is true, an authority conferred upon the receiver to defend suits brought against the company, but this was not intended to authorize a suit to be brought against the receiver in cases where no liability on his part exists. The purpose of the order was to permit the receiver to defend for the railroad corporation so that the rights of the company could be safeguarded. But that court possessed exclusive jurisdiction over the distribution of the assets of the corporation and an adjudication of another court concerning liability of the corporation itself would not be binding on the court in which the receivership is pending as to the right of the judgment creditor to participate in the assets in the hands of the receiver, as would he the case where judgment was obtained against the receiver in a suit brought against him by permission of the court on his own liability. The receiver has not intervened in this case for the purpose of defending the suit against the railroad company, and the fact that he was given authority to do so by the court that appointed him afforded no justification for suing him for a tort committed by the railroad corporation before his appointment. A rehearing is, therefore, granted as to this branch of the case, as well as to the other branch in which the receiver is sued for the tort committed by his servants and employees.