MR. JUSTICE MILLER dissenting.
The rapid absorption of the business of the country of every character by corporations, while productive of much good to the public, is beginning also to develop many evils, not the least of which arises from their failure to pay debts and perform the duties which by the terms of their organization they assumed. One of the most efficient remedies for the failure to pay, when it arises from inability, is to place the corporation in the hands of a receiver, that its affairs may be wound up, its debts discharged, and the remaining assets, if any there be, distributerd among its stockholders. Of the beneficial results of this remedy there can be little doubt. When it is applied with despatch, and the effects of the insolvent corporation are faithfully used to meet its liabilities and its dead body is buried out of sight as soon as possible, no objection can be made to the procedure, and all courts and good citizens zens should contribute, as far as they may, to this sesirable object.
In regard, however, to a certain class of corporations,-a class whose operations are as important to the interests of the community and as intimately connected with its business and social habits as any other,-the appointment of receivers, as well as the power conferred on them, and the duration of their office, has made a progress which, since it is wholly the work of courts of chancery and not of legislatures, may well suggest a pause for consideration. It will not be necessary to any observing mind to say that I allude to railroad corporations. Of the fifty or more who own or have owned the many thousand miles of railway in my judicial circuit, I think I speak within limits in saying that hardly half a dozen have escaped the hands of the receiver. If these receivers had been appointed to sell the roads, collect the means of the companies, and pay their debts, it might have been well enough. But this was hardly ever done. It is never done now. It is not the purpose for which a receiver is appointed. He generally takes the property out of the hands of its owner, operates the road in his own way, with an occasional suggestion from the court, which he recognizes as a sort of partner in the business; sometimes, though very rarely, pays some money on the debts of the corporation, but quite as often adds to them, and injures prior creditors by creating a new and superior lien on the property pledged to them.
During all this time he is in the use of the road and rollingstock, and performing the functions of a common carrier of goods and passengers. He makes contracts and incurs obligations, many of which he fails to perform.
The decision which has just been announced declares that for these failures he cannot be used in a court of law; that by virtue of his receivership, he and all his acts, and the business of the road, are exempted from the operation of the common law, and that all parties deal with him on the implied understanding that they abandon the right to have their complaints tried by jury or by the ordinary courts of justice, and can only obtain such relief as may be had at the hands of a master in chancery of the court which appointed him.
When a receiver appointed to wind up a defunct corporation has no power to make new contracts,-when his sole duty is to convert the property into a fund for the payment of debts, and for distribution among those who are entitled to it,-a very strong reason exists why the court which appointed him should alone control him in the performance of his duty. In such cases, the Court of Chancery has the undoubted right to protect him by injunction against parties suing him in another court, and to punish them for contempt.
Wiswall v. Sampson (14 How. 52) and Peale v. Phipps (id. 368) recognize this principle. In the former case the court decided that a sale of property under a judgment of one court, which was in the actual possession of a receiver appointed by another court, did not confer a valid title as against the sale of the same property subsequently made under an order of the court whose receiver had held possession all the time. The court did not decide that he could not be used at law for any tort committed by him as receiver.