if the property has been improved to the advantage of
the owners, or by express order of the court, the prop-
erty may still remain subject to the burden of these obli-
gations. The court may retain jurisdiction for the fur-
ther adjustment of such matters and may exact a bond
from the owner to insure the fulfillment of any final dis-
position of them made by the court or turn the property
over to the owners subject to all remaining debts and
1 Godfrey v. Ohio & M. R. Co.,
116 Ind. 30, 18 N. E. 61; Texas
Pac. Ry. Co. v. Johnson, 76 Tex.
421, 18 Am. St. Rep. 60, 13 S. W.
463; Texas & P. Ry. Co. v. Adams,
78 Tex. 372, 22 Am. St. Rep. 56, 14
S. W. 666; Boggs v. Brown, 82
Tex. 41, 17 S. W. 830; Texas &
P. Ry. Co. V. Huffman, 83 Tex. 286,
18 S. W. 741; Texas & P. R. Co. v.
Watts (Tex.), 18 S. W. 312.
The discharge of the receiver,
and return of the property to the
owner, leaves the property sub-
ject to any claim or charge legally
resting upon it; and this may be
enforced, through appropriate pro-
cess, by any court having juris-
diction. Texas, etc., Ry. Co. v.
Johnson, 76 Tex. 421, 18 Am. St.
Rep. 60, 13 S. W. 463.
The part of an order discharg-
ing a receiver, making the prop-
erty liable for the receiver's debts,
applies to such debts only as could
be legally enforced. Brunner,
Mond & Co. V. Central Glass Co.,
18 Ind. App. 174, 63 Am. St, Rep.
339, 47 N. E. 686.
While no judgment can be ren-
dered against a receiver after he
has been discharged from his
trust, for torts committed by his
employees while he was receiver,
the court may take the property
of the receivership out of his
hands without discharging him
for the purpose of allowing a
pending action to proceed to judg-
ment. Kloepher v. Osborne, 177
111. App. 384.
The court may require the cor-
poration owning the receivership
property to secure the creditors
by a proper bond. Interstate Trust
& Banking Co. v. United States
Fidelity & Guaranty Co., 133 La.
781, 63 So. 354.
Where a receiver is discharged
and the property turned back by
REMOVAL AND DISCHARGE OF RECEIVER.
Â§ 794 Termination bjr Dismissal of the Suit.
Since the appointment of a receiver and his administra-
tion of the receivership property is merely an ancillary
proceeding and requires for its support the pendency of
an action before the court, ordinarily the dismissal of the
action in which the receiver was appointed will operate
to terminate the receivership.^ But an action may pro-
ceed to a point where its dismissal may not be a mat-
ter of right as far as the parties instituting it are con-
cerned and when a receiver is appointed and claims filed,
such a situation may be created by reason of the rights
of persons other than the parties as to make a dismissal
by the parties inequitable. Under such circumstances
the court will refuse to allow the receivership suit to be
dismissed.- In any event, upon the dismissal of the
action it may be necessary for the receiver to retain pos-
a consent decree subject to all
claims and liabilities, the company
is liable for all injuries growing
out of negligence. Missouri, etc.,
Ry. Co. V. Chilton, 7 Tex. Civ. 183,
27 S. W. 272; Texas, etc., R. Co. v.
Bloom, 60 Fed. 979, 9 C. C. A. 300.
Where a railroad company pro-
cures or acquiesces in the with-
drawal of the receivership and the
discharge of the receiver and the
cancelation of his bond and ac-
cepts the property of the road
which has been increased in value
by the receiver, such railroad may
be sued in assumpsit on a claim
which was valid against the re-
ceiver. Texas & P. R. Co. v. Man-
ton, 164 U. S. 636, 41 L. Ed. 580,
17 Sup. Ct. 216.
But where land was wrongfully
taken possession of by a receiver
and returned to the corporation
after the receiver's discharge, it
is unaffected by the notice of the
receiver to prove claims. Bloom-
fleld R. Co. V. Van Slike, 107 Ind,
480, 8 N. E. 2G9. !
1 Decker v. Berner Bay Min-
ing Co., 3 Alaska 280; Campbell v.
Eversole (Ky.), 38 S. W. 486; In
re Knapp & French, 170 App. Div.
958, 959, 155 N. Y. Supp. 166.
A receivership may be vacated
by the parties to the litigation
without the consent of the re-
ceiver. L'Engle v. Florida, etc.,
R. Co., 14 Fla. 266.
-' Simmons v. Shelton, 112 Ala.
284, 57 Am. St. Rep. 39, 21 So. 309;
Culver Lumber, etc., Co. v. Cul-
ver, 81 Ark. 102, 118 Am. St. Rep.
17, 99 S. W. 391.
Where a receiver has been ap-
pointed at the instance of a cred-
itor over an insolvent corporation,
and other creditors have proved
claims, the court may refuse to
discontinue the receivership suit
even at the instance of the plain-
tiff. Johnson v. .Miller, 96 Fed.
271, 37 C. C. A. 471.
2126 LAW OP RECEIVERS.
session of the property until the court can make proper
orders concerning its return and concerning the accounts
of the receiver and liabilities and rights growing out of
Â§ 795. Technical Discharge of the Receiver.
In the preceding two sections we have considered the
matter of the termination of the receivership with refer-
ence mainly to the right of the court to continue a
receiver in control of the property for the purpose of
protecting, preserving, or managing it for the benefit of
the parties. When this right of the court has ceased and
the active functions of the receiver terminated, the court
still retains jurisdiction over the receiver individually
for the purpose of determining whether or not he has
properly performed and concluded the duties of his
trust.^ The receiver, however, is entitled to a hearing
as to this matter and is, on a proper showing, entitled to
an order, or decree, releasing, or discharging, him from
any further duty or responsibility under the receivership
and declaring that his official relations with the property
and the court have terminated.^
3 Decker Bros. v. Berner's B. M. rendering his account until he is,
Co., 3 Alaska 280. by an order of the court, dis-
1 Belmont Nail Co. v. Columbia charged from his trust. Colwell v.
Iron, etc., Co., 46 Fed. 8; Visage v. Garfield Nat. Bank, 119 N. Y. 409,
Schofield, 60 Ga. 680; Field v. 23 N. E. 739.
Jones, 11 Ga. 413; Robinson v. Ru- A statutory requirement that all
pretch, 147 111. App. 646; Lyon v. of the assets shall have been
United States Fidelity & G. Co., "fully distributed" before dis-
48 Mont. 591, Ann. Cas. 1915D, charge of the receiver means that
1036, 140 Pac. 86; Whiteside v. the assets must be divided, ap-
Prendergast, 2 Barb. Ch. 471; portioned, and delivered to those
Lawson v. Ricketts, 11 Beav. 627. entitled to them and not simply
The active functions of a re- transferred by the receiver, as an
ceiver pendente lite terminate ancillary receiver, to himself as
with the rendition of a judgment primary receiver. Second Nat.
adverse to the party at whose in- B. v. Lappe T. Co., 198 Mass. 159,
stance he was appointed, al- 84 N. E. 301.
though his character as receiver 2 Baughman v. Superior Court,
may continue for the purpose of 72 Cal. 572, 14 Pac. 207; Whiteside
REMOVAL AND DISCHARGE OF RECEIVER.
Interested parties are entitled to a hearing on the ap-
plication for a discharge.^ A discharge will not be
denied on the score that certain debts remain unpaid,
when the funds of the estate have been exhausted pursu-
ant to previous orders of the court/ nor on charges of
mismanagement which a referee has found to be unsup-
ported,^ nor to give parties an opportunity to seek the
revocation of orders as to which they are estopped to
Upon his discharge the receiver has no official status
and can neither be sued nor sue in regard to any matter
connected with his incumbency of the office of receiver.'^
V. Pendergast, 2 Barb. Ch. 471;
People V. Bushwick C. Co., 45 N.
Y. S. R. 329; Langdon v. Vermont
& C. R. Co., 53 Vt. 228.
3 Coburn v. Ames, 57 Cal. 201;
In re Magner, 173 Iowa 299, 155
N. W. 317; Miller v. Loeb, 64 Barb.
454; Johnson v. Henderson, 8 Lr.
Eq. Rep. 521; Brown v. Perry, 1
Ch. (Ont.) 253.
4 Pacific Coast C. Co. v. Esary,
92 Wash. 203, 158 Pac. 1003.
5 Strauss v. Casey Machine S.
Co., 68 Misc. Rep. 474, 124 N. Y.
Allen V. Clare, 136 Ga. 656, 71
S. E. 1101.
7 Reynolds v. Stockton, 140 U. S.
254, 35 L. Ed. 464, 11 Sup. Ct. 773;
Milwaukee & M. R. Co. v. Soutter,
2 Wall. (69 U. S.) 510, 17 L. Ed.
900; Smith v. Jones Lumber &
Mercantile Co., 200 Fed. 647; Bond
V. State, 68 Miss. 648, 9 So. 353;
Interstate Trust & Banking Co. v.
Dierks Lumber & Coal Co., 133
Mo. App. 35, 113 S. W. 1; New
York, etc., Co. v. Jewett, 115 N. Y.
166, 21 N. E. 1066; Ryan v. Hays,
62 Tex. 42; International & G. N.
R. Co. V. Ormond, 62 Tex.. 274;
Fordyce v. Du Bose, 87 Tex. 78, 26
S. W. 1050; Fordyce v. Beecher, 2
Tex. Civ. App. 29, 21 S. W. 179.
After the discharge of a re-
ceiver, his possession, if he re-
tains possession, is that of the
party in interest. Horlock v.
Smith, 11 L. J. Ch. N. S. 157.
Concerning the power of a
court to punish for contempt a
receiver who failed to pay upon
order made after he had disbursed
all the funds of the estate and had
been discharged, a claim that had
been filed with his attorney but
not called to his attention. Chief
Justice Morris of the Supreme
Court of Washington, said: "We
are of the opinion that when it
appeared that the insolvent estate
had been completely exhausted in
complying with the prior orders
of the court, and that it was im-
possible for the appellant, as re-
ceiver, to make the payment re-
quired of him, the proceedings
should have been dismissed. The
court should not, in the alterna-
tive, require its officer to do that
which is impossible, when the im-
possibility arises through no fault
LAW OF RECEIVERS.
An order of discharge may, however, be revoked and
the court may reassume jurisdiction on a showing that
because of inadvertence or of concealment or fraud on
the part of the receiver there still remain assets
of the estate to be disposed of^ or on application of a
creditor who had not been given due notice of the appli-
of the officer and is occasioned
through executing prior orders of
the court, or be punished for con-
tempt. Finding in this a suffi-
cient reason for reversing the
judgment, we refrain from discus-
sing other points." Gustav v.
Esary, 94 Wash. 248, 161 Pac. 1188.
In New York & W. U. Teleg.
Co. V. Jewett, 43 Hun (N. Y.) 565,
affirmed in 115 N. Y. 166, 21 N. B.
1036. The court say: "Obviously
after the receiver has been dis-
charged, and the property, by the
action of the court, has all been
taken out of his hands, there can
be no propriety whatever in any
further proceedings against him,
because thereafter he ceases to
represent any one; he can no
longer act for or represent the
company or its creditors or any
other person interested in the
property; and manifestly the
court could not thereafter make
an order that he should pay a
creditor, he no longer having any
fund out of which payment could
be made." Farmers' Loan & T.
Co. V. Central R. Co., 2 McCrary
181, 7 Fed. 537. Cf. Corser v. Rus-
sell, 20 Abb. N. C. 316.
A suit can not be maintained
against the receivers in their rep-
resentative capacity after their
discharge and turning over of the
property under the orders of the
court. Kirby Lumber Co. v. Cun-
ningham (Tex.), 154 S. W. 288.
The .discharge is not a bar to
an action in conversion by a
claimant of whose claim the re-
ceiver had knowledge and to
whom he had failed to give notice
of the application for a discharge.
Miller v. Loeb, 64 Barb. (N. Y.)
It is no defense to an action
against receivers, that they had
relinquished control, where they
do not show that their accounts
have been acted on and that a
decree discharging them has been
entered. Fordyce v. Chancey, 2
Tex. Civ. App. 24, 21 S. W. 181.
In Texas, under a statute, a re-
ceiver is permitted to be sued
after his discharge, but where
such a suit is commenced it must
be shown that the receivership
was one in the state court. Hovey
V. Weaver (Tex. Civ.), 175 S. W.
The court upon discharging the
receiver may make an order rela-
tive to the disposition of pending
suits. Peterson v. Baker, 78 Kan.
337, 97 Pac. 373; Interstate Trust
& B. Co. v. Dierks Lumber & Coal
Co., 133 Mo. App. 35, 113 S. W. 1;
Barwin Realty Co. v. H. Batter-
man Co., 155 N. Y. Supp. 178.
For a form of discharge see
Duncan v. Atlantic, etc., R. Co.,
88 Fed. 840.
8 Taylor v. Easton, 180 Fed. 363,
103 C. C. A. 509; Harrigan v. Gil-
christ, 121 Wis. 127, 99 N. W. 909.
REMOVAL AND DISCHARGE OF RECEIVER.
cation and is aggrieved at the amount of compensation
allowed the receiver or at any other matter connected
with the allowance of the accounts.^
Â§796. Termination of Receivership by Federal Bankruptcy
If at any time during the pendency of receivership
proceedings against a debtor in a state or federal court,
a valid adjudication of the same debtor as a bankrupt
by a federal court is made, it terminates the jurisdiction
of the receivership court to continue with the adminis-
tration of the estate and requires that the property shall
be turned over to the bankruptcy court to be administered
under the provisions of the national bankruptcy act.
This principle has been established by a decision of the
United States Supreme Court, in which Mr. Chief Justice
''The New Albany Trust Company was appointed
receiver of the property of Zier & Co. under section 1245
of the Revised Statutes of Indiana, Thornton's Rev. Stat,
of 1897, providing that this might be done, 'when a cor-
poration has been dissolved, or is insolvent, or is in im-
minent danger of insolvency, or has forfeited its corpo-
rate rights'; and it was directed to complete unfinished
contracts but to make no new ones. The winding up of
the business was contemplated and entered upon.
Whether the transfers of $3,100 and $9,600 could have
been overhauled in that suit Ave need not inquire, as they
were undoubtedly acts of bankruptcy, and as such justi-
fied the application to the bankruptcy court. And the
In re Magner, 173 Iowa 299, the liability of the receiver for
155 N. W. 317. matters not embraced in his ac-
A conditional discharge does count. Poudir v. New York, L. E.
not oust a court of jurisdiction & W. R. Co., 72 Hun 384, 25 N. Y.
until the condition is fulfilled. Supp. 560.
Bray v. Staples, 180 Fed. 321, 103 i In re Watts, 190 U. S. 1, 23
C. C. A. 451. Sup. Ct. 718, 47 L. Ed. 933.
The discharge does not affect
II Recâ€” 134
2130 LAW OF RECEIVERS.
operation of tlie bankruptcy laws of the United States
can not be defeated by insolvent commercial corporations
applying to be wound up under state statutes. The bank-
ruptcy law is paramount, and the jurisdiction of the fed-
eral courts in bankruptcy, when properly invoked, in the
administration of the affairs of insolvent persons and
corporations, is essentially exclusive. Necessarily when
like proceedings in the state courts are determined by
the commencement of proceedings in bankruptcy, care
has to be taken to avoid collision in respect of property
in possession of the state courts. Such cases are not
cases of adverse possession, or of possession in enforce-
ment of pre-existing liens, or in aid of the bankruptcy
proceedings. The general rule as between courts of con-
current jurisdiction is that property already in posses-
sion of the receiver of one court can not rightfully be
taken from him without the court's consent, by the re-
ceiver of another court appointed in a subsequent suit;
but that rule can have only a qualified application where
winding up proceedings are superseded by those in bank-
ruptcy as to which the jurisdiction is not concurrent.
Still it obtains as a rule of comity, and accordingly the
receiver of the District Court brought his appointment
to the knowledge of the Floyd Circuit Court and re-
quested the delivery of the assets."
This decision is of course authoritative and conclusive
upon the question. It may be added, however, that it is
immaterial upon wTiat act of bankruptcy the bankruptcy
proceedings may have been founded, what may have been
the grounds for the appointment of the receiver, or how
long the receivership proceedings may have been
2 In re Maplecroft Mills, 218 Virginia Iron, Coal & Coke Co. v.
Fed. 659: Bank of Andrews v. Olcott, 197 Fed. 730, 117 C. C. A.
Gudger, 212 Fed. 49, 128 C. C. A. 124; A. H. Alden & Co. v. New
505: Morehouse v. Giant Powder York Commercial Co., 157 App.
Co., 206 Fed. 24, 124 C. C. A. 158; Div. 872, 142 N. Y. Supp. 772.
REMOVAL AXD DISCHARGE OP RECEIVER, 2131
Â§ 797. Receivership Proceeding's as an Act of Bankruptcy.
Not only is it true that the institution of bankruptcy
proceedings will terminate receivership proceedings, but
it is also true that the appointment of a receiver may
itself furnish an opportunity, or reason, for instituting
the bankruptcy proceedings that will terminate his
The National Bankruptcy act (Act of 1898 and amend-
ments thereto) provides [section 3a (4)] that one who
applies, when he is insolvent, for the appointment of a
receiver, thereby commits an act of bankruptcy ; and the
act further provides that, within four months after com-
mitting this act of bankruptcy he may be adjudged an
involuntary bankrupt. If an insolvent debtor, therefore,
seeks the aid of a receivership, his creditors, if they
prefer, may secure an administration of his estate by a
Concerning this provision of the bankruptcy act it has
been held :
(1) That an act of bankruptcy is committed by the
application for a receiver, whether or not a receiver is
actually appointed or the court to whom the application
is made has jurisdiction to make the appointment.^
(2) That the application having been made the only
material question is whether or not the applicant was
insolvent at the time ; the grounds on which the applica-
tion is based or on which the appointment is made, if it
is made, are alike immaterial.^
1 Graham Mfg. Co. v. Davy-P. 2 In re Maplecroft Mills, 218
Coal Co., 238 Fed. 488, 151 C. C. A. Fed. 659; In re Rankin, 210 Fed.
424; Doyle-Kidd Dry Goods Co. v. 529; order affirmed (C. C. A.) Hill
Sadler-Lusk Trading Co., 206 Fed. v. Western Electric Co., 214 Fed.
813; Bank of Andrews v. Gudger, 243, 130 C. C. A. 613; Exploration
212 Fed. 49, 128 C. C. A. 505; Pugh Mercantile Co. v. Pacific Hard-
V. Loisel, 219 Fed. 417, 135 C. C. A. ware & Steel Co., 177 Fed. 825,
221; Roberts Cotton Oil Co. v. 101 C. C. A. 39.
F. E. Morse & Co., 97 Ark. 513, .3 Gi-aham Mfg. Co. v. Davy-P.
135 S. W. 334. Coal Co., 238 Fed. 488, 151 C. C. A.
2132 LAW OF RECEIVERS.
(3) That the apx^lication is made by the debtor, though
he be not the formal applicant, if it is made through his
procurement or connivance.^
(4) That if the application is made on behalf of a cor-
poration or partnership, it must have been made by
parties having due authority to act in the matter.^
The same section of the bankruptcy act also provides
that it shall be an act of bankruptcy on the part of a
debtor if a receiver shall have been placed in charge of
his property on the ground of his insolvency. If, there-
fore, certain creditors of a debtor have chosen to have an
administration of his property by a receiver, others, if
they prefer, may, by acting within four months, substi-
tute the administration of the bankruptcy court.
Under this section it has been held :
(1) That the appoint] nont of the receiver can not be
collaterally attacked in the bankruptcy proceedings ; and
that if the record of the receivership proceedings affirm-
atively shows that the appointment was on the ground of
insolvency, the record can not be impugned on that point
in the bankruptcy proceedings.^
424; James Supply & H. Co. v. tile Co. v. Pacific Hardware &
Dayton C. & I. Co., 223 Fed. 991, Steel Co., 177 Fed. 825, 101 C. C. A.
139 C. C. A. 367; Hill v. Western 39.
Electric Co., 214 Fed. 243, 130 C. ^^^ consent to an appointment
C. A. 613; In re Muir^ 212 Fed. ^^ application of another is not
necessarily equivalent to having
"applied for a receiver." In re
Gold Run Mining & Tunnel Co-
debtor was insolvent at the time) ; ^oo Fed 16**
Blackstone v. Everybody's Store, 5 j^^^^gg Supply & H. Co. v. Day-
207 Fed. 752, 125 C. C. A. 290; ton C. & I. Co., 223 Fed. 991, 139
Exploration Mercantile Co. v. Pa- c. C. A. 367; In re Maplecroft
cific Hardware & Steel Co., 177 Mills, 218 Fed. 659; Re Wm. S.
Fed. 825, 101 C. C. A. 39. Butler & Co., 207 Fed. 705, 125
4 James Supply & Hardware C. C. A. 223; Exploration Mercan-
Co. v. Dayton Coal & I. Co., 223 tile Co. v. Pacific H. & Steel Co.,
Fed. 991, 139 C. C. A. 367; In re 177 Fed. 825, 101 C. C. A. 39.
Muir, 212 Fed. 495; Bank of An- Greenwood Gum Co. v. Zim-
drews v. Gudger, 212 Fed. 49, 128 merman, 240 Fed. 637, 153 C. C. A.
C. C. A. 505; Exploration Mercan- 435.
495 (the bankruptcy court itself
will determine whether or not the
REJIOVAL AND DISCHARGE OF RECEIVER.
(2) That if the receivership record does not show the
ground of the appointment the fact as to that matter
may be shown by evidence aliunde."'
(3) That if insolvency is one ground of the appoint-
ment of the receiver, it is immaterial that there may
have been other grounds.^
(4) That it is immaterial whether or not the debtor
was insolvent if only the appointment was made on that
(5) That for the purposes of this section insolvency
is to be taken in the sense of bankruptcy insolvency â€”
that is, excess of liabilities over assets â€” and not in the
commercial sense â€” that is, inability to pay debts as they
mature in the ordinary course of business ; that the
appointment of a receiver for any other reason than
bankruptcy insolvency is not an act of bankruptcy.^**
- In re Maplecroft Mills, 218 Fed
s Greenwood Gum Co. v. Zim
merman, 240 Fed. 637, 153 C. C. A
435; In re Spalding, 139 Fed. 244
71 C. C. A. 370; Hooks v. Aldridge
145 Fed. 865, 76 C. C. A. 409.
!' Harvey v. Gartner, 136 La. 411
Ann. Cas. 1916D, 900, 67 So. 197
Karst V. Black Diamond Range
Co., 82 N. J. Eq. 231, 88 Atl. 691s
(after the appointment on a bill
alleging insolvency the bill can
not be amended so as to avoid
the effect of the appointment as
an act of insolvency).
10 In re Butte Duluth Mining
Co., 227 Fed. 334; In re Valentine
Bohl Co., 224 Fed. 685, 140 C. C. A.
225; In re Wm. S. Butler & Co.,
207 Fed. 705, 125 C. C. A. 223; In
re Columbia Real Estate Co., 205
Fed. 980; Schumert & Warfield v.
Security Brewing Co., 199 Fed.
358 (appeal dismissed, 202 Fed.
1023); Karst v. Black Diamond
Range Co., 82 N. J. Eq. 231, 88
APPEALS IN RECEIVERSHIP MATTERS AND THEIR EFFECT.
1. Revieiv ability as Affected hy Parties or Nature of
Â§798. Scope of Chapter and General Rules Applicable to
It is apparent that in appeals in receivership cases and
matters arising out of their administration that the gen-
eral rules respecting all appeals apply. Hence we shall
in this chapter only deal with those matters in which the
fact of the receivership was considered as bearing par-
ticularly on the appeal or proceedings arising therefrom.
In a general way, it may be said that the principal ques-
tions arising in connection with this topic are those aris-
ing in connection with the right to take an appeal and
the scope of the review by the appellate court.
Â§799. Appealability as Dependent upon Finality and Preju-
dicial Character of Order.
One of the tests whether an order issued in a receiver-
ship proceeding is appealable or not is whether it is
final in character and of a prejudicial effect to the inter-
ests of the appellant. If the order requires the payment
of money by the one complaining or the doing of an act
b}^ or against him, it is generally in effect a final judg-
ment, but if before execution or enforcement it is sub-
ject to further action by the court it is not regarded as
final and not reviewable by direct appeal.^ It is essential
1 In re Farmers Loan & Trust 114 Fac. 838; Burnham v. Barrett,
Co. Petitioners, 129 U. S. 206, 209, 137 111. App. 119; Malone v. John-
32 L. Ed. 656, 9 Sup. Ct. 265; son, 45 Tex. Civ. 604, 101 S. V^.