Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/817

 CHAP. XVII.] LEGAL RELATIONS AMONG CREDITORS. [§ 814. Bat a judgment creditor will never be entitled to dispute the validity of a prior mortgage merely on the ground that its ex- ecution was irregular, when the corporation lias had the bene- fit ot the mortgage and would itself be in no position to con- test its validity. 1 § 814. When there is a receiver of the corporate assets, the various rights of creditors are enforceable by him ; and he may contest the payment of debts arising from ultra vires or illegal transactions, and maintain actions to recover moneys paid on illegal or fraudu- lent claims to persons assuming to be creditors of the corpora- tion. 2 If, however, the receiver is delinquent in the discharge Capacities of receiver. Mortgage trustee. Co., 2 Wall. 283; Bundy v. Iron Co., 38 Ohio St. 300; Pittsburg Carbon Co. v. McMillin, 119 N. Y. 4(5. See Hasselman v. United States Mort- gage Co., 97 Ind. 365. A decree of sale of a railroad, had in the fore- closure of a first mortgage thereon, recited that the sale " shall be sub- ject to the liens established, or which may be established, by said court in this cause on references heretofore had and now pending, as prior and superior to the lien of the holder of bonds issued under the first mort- gage, decreed to be foreclosed by former decree in said cause." These references were to a master to deter- mine the priority of the lien of receiver's certificates and the like, and in the orders of reference, per- mission was given to the bondhold- ers to oppose any claims before the master. The purchaser at the sale was held to have no standing in court, even on the ground that these liens had been established by fraud practised on the master and the court, to re-litigate the liens ex- pressly subject to which he bought and took title, the same recitals being in substance expressed in his deed; said purchaser having made no offer to surrender the property to be re-sold for the benefit of those concerned. Swann v. Wright's Ex'r, 110 U. S. 590. 1 Thomas v. Citizens' Horse R'y Co., 104 111. 462; Taylor v. Agricul- tural, etc., Ass'n, 68 Ala. 229; Bundy v. Iron Co., 38 Ohio St. 300. 2 See Whittlesey v. Delaney, 73 N. Y. 571; also §§ 273, 542. The receiver of a corporation may avoid a chattel mortgage on its property, on the ground that it was not filed according to law. Farmers' L. and T. Co. v. Minneapolis, etc., Works, 35 Minn. 543. Compare, as to re- ceiver's powers, Vanderbilt v. Cen- tral R. R., 43 N. J. Eq. 669; Harring- ton v. Connor, 51 Neb. 214; Bosworth v. Terminal Road Ass'n, 174 U. S. 182. A receiver of a railroad property is not bound to adopt the contracts (accept the leases) of the railroad company; he is entitled to a reason- able time to elect whether to adopt or repudiate. If he elect to adopt a lease, he becomes vested with title to the leasehold interest, and is lia- ble upon the covenant to pay rent. United States Trust Co. v. Wabash R'y, 150 U. S. 287. 797