receiver can not be made out of Door Co., 184 Fed. 459.
the general fund. Attorney Gen- Policy-holders in an insolvent
eral v. North American L. Ins. Co., life insurance company employed
91 N. Y. 57, 43 Am. Rep. 648; an attorney to resist the allow-
People V. Knickerbocker, etc., Ins. ance of improper charges made by
Co., 38 Hun (N. Y.) 601, 622. the receiver,— Held that the at-
7 Brock V. Automobile L. «&; S. torney's compensation was not
Co., 137 La. 9, 68 So. 195; Drake payable from the assets. Attorney
V. Thyng, 37 Ark. 228. General v. Continental L. Ins. Co.,
8 Atkinson & Co. v. Aldrich- 31 Hun (N. Y.) 623; Attorney Gen-
Clisbee Co., 248 Fed. 134; Barker eral v. North American L. Ins. Co.,
V. Southern Building & Loan 91 N. Y. 57, 43 Am. Rep. 648.
1780 LAW OF RECEIVERS.
called upon to enforce and fix the amount of any liens
that such attorneys ordinarily should have upon the
funds distributed to the parties that they represent.^*^
Allowances to the counsel of trustees suing in fore-
closure are, of course, allowed and in varying amounts
depending upon the amount involved.^ ^
10 Pennsylvania Steel Co. v. New etc., R. Co., 93 U. S. 352, 23 L. Ed.
York C. Ry. Co., 221 Fed. 440; 950; So. California, etc., Co. v.
Stewart v. McDonald, 147 Ga. 158, Union L. & T. Co., 64 Fed. 450, 12
93 S. E. 86. C. C. A. 215.
11 Williams v. Morgan, 111 See, also. People v. Knicker-
U. S. 684, 28 L. Ed. 559, 4 Sup. bocker Trust Co., 127 App. Div.
Ct. 638; Cowdrey v. Galveston, 215, 111 N. Y. Supp. 2.
CHAPTER XXII.
SALES AND REORGANIZATIONS OF RECEIVERSHIP PROPERTY.
1. Sale Proceedings and General Effect.
§ 640. General Nature of the Sale.
A sale of receivership property by the receiver consti-
tutes a judicial sale.^ A statutory right of redemption
from sales upon execution does not apply to a sale by a
receiver under a decree of court.- The court has power
to determine the terms and conditions of the sale in
advance. The court may in ordering a sale require that
no bid be accepted which is less than a certain minimum
price for the property to be offered for sale.^ It may also
1 Rice V. Ahlman, 70 Wash. 12,
126 Pac. 66.
A provision in a mortgage to a
building association that it is non-
negotiable and uncollectible by
anyone other than the association
is not effective as against an
assignment of it by the receiver
of the association made under
order of . the court. Spinney v.
Miller, 114 Iowa 210, 89 Am. St.
Rep. 351, 86 N. W. 317.
In re Denison, 114 N. Y. 621, 21
N. E. 97, the court held that defen-
dant's offer to purchase a judg-
ment from a receiver, which offer
the court had authorized the re-
ceiver to accept, constituted a ju-
dicial sale which could be enforced
on motion.
Even though the sale was ad-
vertised by the corporation, where
it was conducted by the receiver
he was not required to proclaim
that it was a receiver's sale.
Fryar v. Hazelwood Holstein
(1
Farms, 97 Wash. 78, 165 Pac. 1084.
2 Cressler v. Tri-State Loan &
Trust Co., 182 Ind. 572, 107 N. E.
68.
3 In Hewitt v. Walters, 21 Ida.
1, Ann. Cas. 1913C, 35, 119 Pac. 705,
the court said: "The fact that
the trial judge fixed the sum of
$56,546.79 as the minimum bid for
the property which would be re-
ceived or considered was not an
excess of jurisdiction and it can
not be ascertained whether it was
even erroneous or not until after
an attempt has been made under
such order to sell the property
and it has actually been exposed
for sale. The court has had this
property in its custody for a
couple of years and is presumably
familiar with the nature and char-
acter of the property and its ap-
proximate value. If a bid had
been received and accepted by
the receiver, the court would
nevertheless be at liberty to re-
781)
1782
LAW OF RECEIVERS.
provide for tlie manner and character of the. payment^ or
that the sale be made in such a manner as to exonerate
directors from any liability for mismanagement or viola-
tion of anti-trust laws.^
§ 641. Necessity for and Scope of Order for the Sale.
The question whether a sale of the receivership prop-
erty should be made and the terms thereof are matters
for the determination of the receivership court acting
under its discretionary powers. The issuance of an order
for such a sale is a prerequisite to a valid sale.^
ject the bid as not being adequate
or commensurate with the value
of the property. It appeals to us
as being a very wise and proper
exercise of the discretion of this
court to fix a minimum bid in the
first place if the court is at the
time of making the order of sale
so advised and Informed as to
enable it to fairly judge of the
probable value of the property.
This practice seems to have been
adopted by other courts and to
have received the sanction of ap-
pellate courts. See Bryan-Brown
Shoe Co. v. Block, 52 Ark. 458, 12
S. W. 1073; Slaughter v. Strother,
99 Ga. 633, 27 S. E. 764; In re
Newark Sav. Inst. (N. J.), 9 Atl.
375, 34 Cyc. 319 (v) ; Pocatello
First Nat. Bank v. Bunting, 7 Ida.
387, 63 Pac. 694; Nisbet v. Great
Northern Clay Co., 41 Wash. 107,
S3 Pac. 15."
A decree which required the
purchasers to bid enough to pay
certain claims could properly be
amended at a subsequent term, by
requiring that the sale should be
made subject to such claims, so
that they would remain as a bur-
den upon the property. Turner v.
Indianapolis, B. & W. R. Co., 8
Biss. 380, Fed. Cas. No. 14,259.
The court has power to order
the sale to be made at not less
than a given price. Mcllhenny v.
Binz, 80 Tex. 1, 26 Am. St. Rep.
705, 13 S. W. 655.
Where the court has under con-
sideration the question whether
it will fix an upset price on fore-
closure sale below which the prop-
erty will not be sold, the moving
party can not have the judge dis-
qualify for bias and prejudice.
In re Equitable Trust Co., 232 Fed.
836, 147 C. C. A. 30.
â– i Farmers' Loan Co. v. Oregon
P. R. Co., 28 Or. 44, 40 Pac. 1089.
5 Stokis V. Williams, 226 Fed.
148, 144 C. C. A. 146; Craig v.
James, 89 App. Dlv. 541, 85 N. Y.
Supp. 583 (affirmed in 181 N. Y.
538, 73 N. E. 1121.
1 Ellis V. Little, 27 Kan. 707;
Mason v. Hubner, 104 Md. 554,
65 Atl. 367; In re Abbott, 187 Mich.
229, 153 N. W. 795; Northwestern
Nat. Bank of Minneapolis v. Mick-
elson-Shapiro Co., 134 Minn. 422,
159 N. W. 948.
Where a court has power to en-
force an equitable lien by a sale.
SALES OF RECEIVERSHIP PROPERTY.
1783
The court should, however, be careful to see that a
proper case is presented for the exercise of such power,
and to see particularly that the owner of the property
can not be unduly prejudiced by the sale thereof.- The
order must be made by a court while acting within its own
jurisdiction^ and should not include property the sale of
which has not been requested in the application for the
it may authorize its receiver to
sell the property covered by the
lien. McChesney v. Kona Sugar
Co., 15 Haw. 710.
"All the authorities agree that
courts of equity have an absolute
power over all sales had under
their orders in confirming them or
setting them aside and reopening
the biddings, etc." State v. Roan-
oke Nav. Co., 86 N. C. 408.
See, also, Parker v. Bluffton Car
Wheel Co., 108 Ala. 140, 18 So.
938; Merchants Bank v. Moore, 68
Minn. 468, 71 N. W. 671; Patter-
son V. Patterson, 207 Pa. St. 252,
56 Atl. 442.
Under U. S. Comp. St. 1901, p.
3507, 5234, allowing a receiver of
a national bank to sell the assets
of the bank upon an order of a
court of record of competent juris-
diction, such order is a prerequi-
site to a valid sale by the receiver.
Tourtelot v. Booker (Tex. Civ.
App.), 160 S. W. 293.
See, also. State v. Fawcett, 58
Neb. 371, 78 N. W. 636; Boothe v.
Summit Coal Mining Co., 63 Wash.
630, 116 Pac. 269.
Where under the statute the re-
ceiver of a corporation is empow-
ered to sell, convey,and assign the
estates, rights and interests of the
corporation for which he acts, the
court has power to determine and
control the terms of such sales
and authorize them to accept such
offers as in the discretion of the
court are deemed advantageous to
the administration of the estate,
and where the statute does not
prevent it, and the practice is in
accord with the state practice, the
federal court may authorize its
receivers to sell at either public
or private sale, and may authorize
the acceptance of offers and in
default of better bids, decree a
private sale of corporate property
without notice by advertisement.
Stokes V. Williams, 226 Fed. 148,
141 C. C. A. 146; Rogers v. Rogers
Locomotive Co., 62 N. J. Eq. Ill,
50 Atl. 10.
2 South Baltimore, etc., Co. v.
Kirby, 89 Md. 52, 42 Atl. 913.
The receiver who attempts to
sell without a proper order of
court may become personally re-
sponsible upon the agreement to
sell. Wolf V. Lovering, 159 Fed.
91, 86 C. C. A. 281.
Forsaith Mach. Co. v. Hope
Mills Lumber Co., 109 N. C. 576, 13
S. E. 869. In this case it appeared
that the owner of the property
was insolvent and that all its
property had to be sold to satisfy
the numerous debtors who were
parties to the action. Dixon v.
Rutherford, 26 Ga. 149.
3 Atlantic Nat. Bank v. Peregoy-
Jenkins Co., 147 N. C. 293, 61
S. E. 68.
1784
LAW OF RECEIVERS.
order.* If the order for the sale is void, the sale made
pursuant to it will likewise be void.^ When an order for
sale fixes a definite time for the sale, a sale made several
months after that time without further notice or author-
ity from the court is a nullity.^ The directions in the
order for the sale must be strictly complied with in order
to validate the sale.'^ If the receiver sells the property
in conformity with the order it will serve as a protection
to him personally.^ The general rule is that the court
should not order a sale of the receivership property
prior to the final decree,'' but there are exceptions to the
rule, especially where the property is of a nature liable
to deterioration or loss or likely to cause great expense
for its upkeep or in cases of insolvency where it is evident
that the property will without doubt be required to be
sold.i"
4 Riffle V. Sioux City & Rock
Springs Coal Mining Co., 20 Wyo.
442, 124 Pac. 508.
5 Charles S. Riley & Co. v. Car-
ter & Pratt, 165 N. C. 334, 81 S. E.
414.
6 Dull V. Le Fevre, 222 Fed. 471;
Ackerman v. Ackerman, 50 Neb.
54, 69 N. W. 388, 392.
7 Knox V. Gibson, 23 Colo. App.
402, 128 Pac. 470.
s Walling v. Miller, 108 N. Y.
173, 2 Am. St. Rep. 400, 15 N. E.
65; Beardsley Co. v. V. E. Ash-
down & Co., 73 W. Va. 132, 80
S. E. 128.
9 Brush V. Jay, 113 N. Y. 482, 21
N. E. 184; Esterlund v. Dye, 56
Ga. 284; Boothe v. Summit Coal
Mining Co., 63 Wash. 630, 116 Pac.
269; Eskridge v. Rushworth, 3
Colo. App. 562, 34 Pac. 482.
Property of an insolvent corpo-
ration may be sold pending litiga-
tion to wind up its affairs. Mc-
Graw V. Mott, 179 Fed. 646, 103
C. C. A. 204.
10 A receiver of the property of
a corporation owning several dis-
tilleries whose operation will re-
quire the making of contracts for
feeding cattle, and the involving
of large expense, may be author-
ized to sell the distillery and hold
the proceeds for the benefit of
such claims as may be adjudged
valid. Olmstead v. Distilling & C.
F. Co., 73 Fed. 44.
Perishable property may be sold
promptly. In re Desrochers, 183
Fed. 991; Boothe v. Summit Coal
Mining Co., 63 Wash. 630, 116
Pac. 269; National Park Bank v,
Goddard, 131 N. Y. 494, 62 Hun
31, 30 N. E. 566; First Nat. Bank
V. Shedd, 121 U. S. 74, 30 L. Ed.
877, 7 Sup. Ct. Rep. 807; Crane v.
Ford, Hopk. Ch. (N. Y.) 114; State
V. Shelton, 238 Mo. App. 281, 142
S. W. 417.
SALES OF RECEIVERSHIP PROPERTY.
1785
The order should properly describe the property to be
sold.^^ The court may where it deems it advisable to do
so order the sale of only a part of the property.^^ The
order for the sale may be modified by the court jjrior to
the sale in respect to its terms or conditions. ^^
And the court may order part of
the property sold to pay taxes
where it can be done by reason of
its nature and where it is clearly
necessary. National Bank of the
Metropolis v. Sprague, 20 N. J. Eq.
170.
A sale of property by a receiver,
in whose hands it has been placed
pending a litigation concerning the
rights of the parties thereto, may
be ordered where the income is
insufficient to pay the expenses
of the receivership and the corpus
is gradually being diminished, al-
though the interests of the parties
therein have not been determined.
Smith v. Burton, 67 Vt. 514, 32
Atl. 467.
Personal property may properly
be sold in advance of the ascer-
tainment and adjustment of the
liens thereon and their priorities.
Clarksburg Casket Co. v. Valley
Undertaking Co., 81 W. Va. 212,
94 S. E. 549.
Under the statutes, a court of
equity in foreclosure may order
its receiver to sell property be-
fore a decree determining rights
of parties, when a sale will bene-
fit all parties whose rights are
involved. Lawton Mill & Eleva-
tor Co. v. Farmers' & Merchants'
Bank (Okla.), 164 Pac. 670.
A sale of the assets of the re-
ceivership will not be ordered in
advance of a hearing on the mer-
its unless the peculiar nature of
the property necessitate such a
sale. California Fruit Growers
Assn. V. Superior Court, 8 Cal.
App. 711, 97 Pac. 769; Carpenter
V. Landman, 192 Mich. 544, 159
N. W. 322.
11 Dixon V. Rutherford, 26 Ga.
149.
Where the order directs the sale
of all the property of a defendant,
and the receiver sells lot 2, being
part of it, the sale is good. Bar-
ron V. Mullin, 21 Minn. 374.
12 State V. District Court in and
for Third Judicial Dist., 37 Utah
418, 108 Pac. 1121.
13 In re Receivership of Great
Western Beet Sugar Co., 22 Idaho
328, 43 L. R. A. (N. S.) 671, 125
Pac. 799; South Baltimore Brick
& Tile Co. V. Kirby, 89 Md. 52, 42
Atl. 913; Tebbs v. Lee, 76 Va. 744.
The court may change on its
own account an order improvi-
dently granted fixing the terms of
sale in receivership proceedings,
and change the terms from credit
to that of for cash. Fitzner v.
Noullet, 114 La. 400, 38 So. 398.
The court may on petition of
some of the parties in interest,
modify the terms of sale fixed by
the court, which were one-third
cash and the remainder in one,
two, and three years, by allowing
the purchaser to pay all cash on
the approval of the sale, or to
defer such payment at his option.
Mariner v. Ingraham, 230 111. 130,
82 N. E. 577 (affirming 127 111. App.
542).
1786
LAW OF RECEIVERS.
The pendency of a bill of exceptions assigning as error
the granting of an order authorizing a receiver to sell
specified property does not, in the absence of the super-
sedeas required by law in such case, prevent the hearing
and determination of a second application to sell pre-
sented bv the receiver. ^^
§ 642. Necessity and Sufficiency of the Notice of Sale.
In some jurisdictions the procedure in respect to a sale
by a receiver is controlled by statute. In the absence of
statutory provisions on the subject the court has power
to control the details of the su])ject and may fix the char-
acter of notice to be given to the interested parties.^
Where statutory provisions exist in respect to the neces-
sity and character of the notice to be given, the question
then, of course, is whether the particular notice given was
a sufficient compliance with the statute.^ But where the
The court may change the
terms of sale ordering a resale of
the property because of default
of the purchaser, such as short-
ening the terms of credit to be
given and especially in a case
where the statute provides that
the court may direct the sale of
property on such terms as it may
deem best. Dickinson v. Clement,
87 Va. 41, 12 S. E. 105.
But the court should not amend
its order without a sufficient rea-
son appearing for such amend-
ment or modification. Earle v. Mc-
Cartney, 112 Fed. 372 (affirmed
without discussion on this point
in 115 Fed. 462, 53 C. C. A. 392.)
li Farmers' Co-Op. Mfg. Co. v.
Drake, 96 Ga. 766, 22 S. E. 1004.
1 Farmers' Hardware & Imple-
ment Co. V. Thacker, 54 Okla. 425,
153 Pac. 1144.
"Where notice of a receiver's
sale in winding up proceedings of
an insolvent corporation had been
published for the usual period in
two newspapers of general cir-
culation, and notices of the sale
had been posted for thirty days at
the court house door and three
other public places in the county
in which the property sold was
situated, a copy of the decree con-
taining all particulars of the sale
was sent to every known creditor
and stockholder, the sale was
fairly conducted, and from the
kind of the property sold there
was little prospect of an increase
over the bid accepted, confirma-
tion of the sale was proper. Cop-
ping V. Hillsboro Clay Mfg. Co.,
153 N. C. 329, 69 S. E. 250.
2 Calvert v. Woods, 246 Pa. 325,
92 Atl. 301; Friedrichs v. Fried-
richs, Young & Taney, 126 La.
689, 52 So. 996.
SALES OF RECEIVERSHIP PROPERTY. 1787
practice of tlie state jurisdiction in which a federal
court is sitting permits of the acceptance of offers to
purchase property and in default of better bids, decree-
ing private sales of receivership property without notice
by advertisement, the latter court will follow the state
practice. In such cases notice of the offer of purchase
and its terms will be given to the creditors and stock-
holders of the corporation and an opportunity accorded
them to object to its accej^tance or make a better offer.^
§ 643. General Manner of Conducting the Sale.
In accordance with the general control which the re-
ceivership court has over matters connected wdth sale
proceedings of the estate, it naturally follows that it may
direct the manner in which the sale is to be conducted.^
In the absence of any specific directions by the court, the
matter may be governed by court rules requiring judicial
sales to be made at public auction.- Statutes regulating
sales of realty under execution do not, as a general rule,
apply to receiver's sales. ^ The sale must be conducted
in a manner and with a view to obtain the highest price
for the property sold.^ Thus if the property is more
valuable as a whole, it should not be offered for sale in
3 stokes V. Williams, 226 Fed. In an action against a receiver
148, 141 C. C. A. 146. on a note and deed of trust, a de-
1 Farmers' Hardware & Imple- cree directing that the property
ment Co. v. Thacker, 54 Okla. 425, covered by the deed of trust be
153 Pac. 1144; First Nat. Bank v. sold should not be issued to the
Colonial Trust Co. (Okla.), 167 sheriff or constable of the county
Pac. 985. where the property was situated
A purchaser at a receiver's sale since the property is already in
can not object that the receiver the custody of the law. Wharton
did not himself make the sale. v. Washington County State Bank
Threadgill v. Colcord, 16 Okla. (Tex. Civ. App.), 153 S. W. 699.
447, 85 Pac. 703. 4 In re Receivership of First
li Edgerly v. Blackburn, 140 App. Trust & Savings Bank of Billings,
Div. 419, 125 N. Y. Supp. 353. 45 Mont. 89, 122 Pac. 561.
3 Cressler v. Tri-State Loan & A sale by a receiver in collusion
Trust Co., 182 Ind. 572, 107 N. E. with the insolvent debtor is void
68. as to creditors, and the receiver is
1788
LAW OF RECEIVERS.
lots before offering it for sale as a wliole." It is not
objectionable for an officer of the receivership corpora-
tion to act as auctioneer at the sale where it is conducted
liable for the full value of the
property. Re Shea, 57 Minn. 415,
59 N. W. 494.
In Marshall v. Neisler, 148 Ga.
711, 98 S. E. 352, the court said:
"The receivers of the Farmers'
& Merchants' Bank were ordered
by the court to sell the entire
property of the bank held by them,
and to make report of the sale to
the court for confirmation or re-
jection. They filed a report recit-
ing that the property had been
sold to W. E. Marshall upon his
bid of $4510, and recommended
that the sale so reported be con-
firmed. C. H. Neisler filed objec-
tions to the confirmation of the
sale to Marshall, upon the ground,
among others, that the property
had been cried off to him for the
sum of $3850, he being the highest
and best bidder. The evidence be-
for the court disclosed that the
property was bid off by Neisler at
the last-named sum, and that
thereafter the receivers again ex-
posed the property for sale, over
Neisler's protest, when it was
cried off to W. E. Marshall for
the sum of $4510, as reported by
the receivers; Neisler also being
a bidder when the property was
offered a second time. When the
matter of confirmir^ the sale was
before the court, the judge passed
an order reciting that at the sale
the property had been knocked
off to Neisler at $3850, and that
this was not a fair and adequate
price therefor, but that, Neisler
having in open court offered to
raise his bid to $5000, aud it ap-
pearing that this sum was a fair
and adequate price for the prop-
erty sold, it was ordered that the
sale to him be confirmed, and
that upon payment of the $5000
in cash the receivers deliver the
property to him and make to him
an appropriate conveyance. To
this order Marshall excepted upon
various grounds. Held, that the
court committed no error in ren-
dering the decree complained of.
See Moore v. Triplett, 96 Va. 603,
32 S. E. 50, 70 Am. St. Rep. 882
(5).
"See, also, 16 R. C. L. § 81, p.
113, as to right of bidder to ex-
cept."
An order to sell the business
and all personal property as a
whole is erroneous and not calcu-
lated to sell the property to the
best advantage. Case v. Fish, 63
Wis. 475, 497.
The receivership corporation is
not liable for any dereliction of
the receiver in conducting the sale
of its property. Fryar v. Hazel-
wood Holstein Farms (Wash.),
165 Pac. 1084.
5 Patterson v. Patterson, 207 Pa.
St. 252, 56 Atl. 442.
In the above case, the objecting
party offered to put up a bond to
bid a substantially larger price on
a re-sale for the property as a
whole.
A lump sale will not be dis-
turbed where there was no sepa-
rate appraisement of the property.
Smith V. D. A. Self & Co., 126 La.
364, 52 So. 543.
Shares of stock held by the re-
SALES OF RECEIVERSHIP PROPERTY. 1789
fairly.* Commissions and brokerage may be allowed
for the making of such sales, but only with the approval
of the court,'^ in addition to the other ordinary expenses
connected with it.® Upon a proper showing and furnish-
ing of an adequate bond, the court may enjoin the re-
ceiver from going on with the sale or postpone it, but a
very strong showing is required to have the court so act.'-^
And a re-sale may be ordered upon the applicant furnish-
ing a bond to bid a certain amount at a re-sale, but the
persons who furnish such a bond can not avoid liability
by inducing an irresponsible bidder to bid above the
amount designated in their bond.^*^ A deed to the prop-
erty sold at the receiver's sale is inoperative if the sale
is not confirmed by the court, but all irregularities prior
to the execution of a deed are removed by a proper con-
firmation of the sale by the court.^^
§644. What Property May Be Sold Under the Order of the
Court.
The receivership court can only sell property of which
it has the jurisdiction to sell. The court not having juris-
ceiver may be sold under the or- cost of notices of the sale, only
der of the court in one block in- the actual amount paid out is to
stead of in parcels. First Nat. be allowed. Friedrichs v. Fried-
Bank V. C. Bunting & Co., 7 Ida. "chs, Young & Taney, 126 La. 689,
387, 63 Pac. 694. ^^ ^°- ^^^•
9 Cressler v. Tri-State Loan &
6 Friedrichs v. Friedrichs, Young
& Taney, 126 La. 689, 52 So. 996.
Trust Co., 182 Ind. 572, 107 N. E.
68; Houston Ice & Brewing Co. v.
7 Seward v. M. Seward & Son ciint (Tex. Civ. App.), 159 S. W.
Co., 91 Conn. 190, 99 Atl. 887; 409; Williams v. Watt (Tex. Civ.
W. E. Terry Lumber Co. v. Mil- ^pp.), 171 S. W. 266.
dred Park Amusement Co., 143 111. 10 Commonwealth v. Doubleday-
App. 202; Sligh V. Stanley (Tex. Hill Electric Co., 243 Pa. 235, 90
Civ. App.), 204 S. W. 700; Peters ^tl. 67.
V. Anderson, 88 Va. 1051, 14 S. E. ^\ Koontz v. Northern Bank, 83
974; Murray v. Rickard, 103 Va. u. S. (16 Wall.) 196, 21 L. Ed.
132, 48 S. E. 871. 4g5
8 Where a rebate is given by the A deed executed and delivered