Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/832

 § 824. j THE LAW OF PRIVATE CORPORATIONS. [CHAP. XVII. part of the jurisdiction which is exercised by a court of equity in carrying out its duty to protect and preserve trust funds in its hands. It should be exercised with caution, and if possible with the consent or acquiescence of the parties interested in the fund. 1 § 824. In the case of Miltenberger v. Logansport Railway the Federal Supreme Court held that a court of equity could create claims, through a receiver appointed by it on the fore- closure of a railroad mortgage, prior to the lien of the mort- gage ; and could decree that the receiver should pay the operating expenses of the road for ninety days preceding his appointment, and also certain sums of money, amounting to ten thousand dollars, due other and connecting lines for materials and repairs and for ticket and freight balances, a part of which last indebtedness was incurred more than ninety days prior to the appointment of the receiver. The above claims were ordered to be paid out of the net proceeds of the sale, before paying the mortgage bonds. 2 Giving the opinion of the court, J udge LUatchford said : " It cannot be affirmed that no items which accrued before the appointment of a receiver can be allowed in any case. Many circumstances may exist which make it necessary and indispensable to the busi- ness of the road and the preservation of the property, for the receiver to pay pre-existing debts of certain classes, out of the Loomis, 97 U. S. 146; Langdon v. Railroad Co., 53 Vt. 228; see Same v. Same, 54 Vt. 593. 1 Wallace v. Loomis, supra. While a railroad was in the hands of a re- ceiver appointed in a foreclosure suit, the court authorized him to borrow money and issue certificates, to be a lien prior to the mortgage debt, and to part with them at not less than ninety cents on a dollar. The receiver borrowed money by hypothecating some of the certifi- cates. Held, that tin: hypothecated certificates were not liens to the ex- tent of their face; but that a decree was proper allowing the repayment of the moneys loaned on certificates 812 issued at ninety cents on the dollar and making such certificates a lien. Swann v. Clark, 110 U. S. 602. For ordinary debts which were not allowed prior payment (over bond- holders) out of funds in hands of re- ceiver, see Addison v. Lewis, 75 Va. 701; Farmers' L. & T. Co. v. Tel. Co. 148 N. Y. 315. Such are debts in- curred in the construction (not main- tenance) of the road. Boston, etc., Co. v. Chesapeake & O. R. R. Co., 76 Va. 180. - Miltenberger v. Logansport Rail- way, 106 U. S. 286. See Va. & Ala. Coal Co. v. C. R. R. & B. Co. of Ga., 170 U. S. 355.