Page:Harvard Law Review Volume 10.djvu/172

146 or about to be in a case where under the former practice its creditors would be entitled to bring suit to subject its property to a sale for the payment of its debts, and, pending such suit, to ask the appointment of a receiver, the recent practice is for the company itself to anticipate the occurrence of such conditions, and, as the creditors cannot move till they do occur, to seek the court in advance of de- fault, file a petition or bill on its own behalf, and ask the appointment of receivers, usually of its own selection, and almost invariably those most deeply implicated in the past management of the company. We do not recall any important railway recently placed in the hands of a receiver in which this course was not followed; especially our large systems, such as the Atchison and Sante Fé, and the Baltimore and Ohio. In nearly all these cases, if not in all, the former officers, or others intimately concerned in the former management, were chosen as receivers; and, in all cases, those selected in the first instance by the company itself. It cannot yet be said that the practice has received the approval of our highest court. In the litigation of a collateral issue, arising out of the main Wabash case, the Supreme Court of the United States, alluding to the charge of one of the counsel that the bill in the Wabash case was "without precedent," said, " We are not called upon to inquire as to how that may be." But it is certainly true that the practice is actually followed, so far as we know, in nearly all the courts of the United States, as occasions arise.

Some of the results of this practice ought to be noticed, at least in the spirit of inquiry and study. The foremost result, and beyond doubt the result primarily aimed at by this practice, is the keeping of the control of the property and the virtual continuation of the management, in the hands of those who presumably in all cases, and in most cases actually, have brought on the necessity of the receivership. This is certainly a result which calls for a little reflection. In former days such a result was regarded as one to be sedulously avoided. Thus, a distinguished judge used the following language on the occasion of a much pressed motion to appoint as receiver the vice-president of the defaulting railway company, a man of unquestioned integrity and ability: —

"It appeared to the court then, and it does now, that the Chesapeake and Ohio Railroad Company is overwhelmed with debt, secured and un-