Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/834

 § 825.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XVII. § 824a. The Supreme Court has recently spoken some words of warning as to these matters :. " The appointment of a receiver vests in the court no absolute control over the prop- erty, and no general authority to displace vested contract liens. Because in a few specified and limited cases this court has declared that unsecured claims were entitled to priority over raortgao-e debts, an idea seems to have obtained that a court appointing a receiver acquires power to give such prefer- ence to any general and unsecured claims. . . . Can anything be conceived which more thoroughly destroys the sacredness of contract obligations ? One holding a mortgage debt upon a railroad has the same right to demand and expect of the court respect for his vested and contracted priority as the holder of a mortgage on a farm or lot. So, when a court appoints a receiver of railroad property, it has no right to make that re- ceivership conditional on the payment of other than those few unsecured claims which, by the rulings of this court, have been declared to have an equitable priority. No one is bound to sell to a railroad company or to work for it, and whoever has dealings with a company whose property is mortgaged must be assumed to have dealt with it on the faith of its personal responsibility and not in expectation of subsequently displac- ing the priority of the mortgage liens. It is the exception and not the rule that such priority of liens can be displaced." 1 § 825. In respect of the statutory individual liability of shareholders it is said that "a creditor who moves first and proceeds so far as to establish his right to seize the property of a stockholder, or to bring his suit, obtains a priority of right in the fund which the statute has in effect set apart for the payment of his debt. By such proceedings, and the institution of a suit Statutory- liability of share- holders. Priorities of creditors. against such funds by a bona fide holder for value. Turner v. Peoria and S. R. R. Co., 95 111. 134. 1 Kneeland v. American Loan Co., 136 U. S. 89, 97. Opinion of court, per Brewer, J. See Morgan's Co. v. Texas Central Ry. Co., 137 U. S. 172. Compare Quincy R. R. Co. v. Hum- phreys, 145 U. S. 82; Va. & Ala. Coal Co. o. C. R. R. & B. Co. of Ga., 170 814 U. S. 355. The principle of Fosdick v. Schall has never been applied ex- cept in the case of a railroad com- pany. Wood c. Guarantee Trust Co., 128 U. S. 416; Int. Trust Co. v. Uni- ted Coal Co., 27 Colo. 246, collecting authorities ; followed in Standley v. Hendrie, etc., MTg Co., 27 Colo. 331.