FARMERS' LOAN .t: TRUST CO. tI. CAPEr 'FEAR' & Y. VAL. R.
lIIlent of the charter, It is supported upon the consideration ot the greater :efllciendy with which the corporation will thus be ehabled to discharge the ,duties .originally assumed by the corpora.tion to the DubUc, or of the greater facility. with whieh it will support its lIabU1ties and ClUTy out the purposes of its creation."
FARMERS' LOAN & TRUST CO. v. CAPE FEAR & Y. VAL. R. CO. et 0.1. (NORTH STATE IMP. CO. et al., Interveners). (Circuit Court, E. D. North Carolina. July 25, 1894.) 1.
Where one integrity of character, business experience, a capacity for the examination into and comprehension of accounts, and has had large finan.cial experience, and has been concerned in the construction and managelllent of railroads, and knows railroad accounts, he is not disqualified to act as a receiver merely because he is not a railroad expert, acquainted with all the details of the mechanical work ofa railroad plant. The receiver of a railroad company should not be removed on the ground of alleged uiUitness, in removing the treasurer of the company and increasing the expenses of that office, of frequent visits in person on the railroad, and extravagant expenditures, where nothing is shown as to
ability of the PllrsOIt" '<1ischarged,and where the receiver's answer shows that the expeD$/lS of the 1:reasurer'soft\ce have not been increased beyond wbat the pecUlliaQ'" situatioll will warrant, where the allegation as to ,vi$its were posltl;vely,denled by the receiver, and where no extravagant expenditure has been shown.
'A. person is not disqUalified to act et It North Carolina corporation, owing its conception to the citizens of that state, merely because he is not a citizen ot North Carolina.
Yadkin Company, an order was made appointing a and giVillg1eave to any party interested to intervene, and move to rescind orlnodify the order, within 60 days from the date thereof. ,The State Im:provement Company and the People's 'National Bal1k"of;L'ynchburgh; Va., intervene and object to the order.' , Order coritirnied. , ', Watson &; BU:kton, Oh4I'les Price, and F. H. B.usbee, for the motion. , " " "< ' , '. " " COwan & Cross; a '1t Turner, and I. H. Hudson, for respondent.
Inthe matter ,oftM:,!ippointmerif of a receiver for the Cape Fear
SIMONTON, Oircuit Judge. One question made in this matter awaits determination. On the 31st March, last, upon this bill filed by trustees of thefirstmoi1:gage, praying foreclosure, John Gill, Esq., was named as receiver.' The order reserved leave to any party interested therein to intervene, and move to rescind or modify the same, within,,60 days from the date thereot. The practical effect of this reservation was to make, the appointment of the receiver temporary in its nature, until the 60 days had expired, or objection thereto had been heard and considered. Upon the expiration of that period or the hearing of such objection, unless the same proved sufficient, the appointment would become permanent. The interveners have taken advantage of the reservation in the order, and havelllade a full statement of their objections thereto, which have been patiently heard and have been carefully considered. At the hearing, the insolvency pf the Cape Fear & Yadkin Valley Railroad Company, and the imperative necessity for a receiver, have been franldy admitted. The objections presented are to the person named as receiver. When the application was made in the first instau.Ge. by the complainants, Jrfr. Gill was appointed receiver, not on their demand, nor because he was their nominee simply. The necessity for a receivership being apparent, he was selected, because he was preferred by the representatives of the first mortgage bondholders, and because the second mortgage bondholders had shown their confidence in him, he being the presideut and manager of the Mercantile Trust Company of Baltimore, their trustee. His high character for integrity and business capacity, known to the court, recommended and secured the appointment. At the hearing, certain general objections were urged against continuingWm in his position, and certain special objections were urged, growing out of his management as receiver. It is said that he is not a railroad man, his employment being that of a banker and financier. If by this is meant that he is not a railroad expert, acquainted with all the details of
FARMERS'LOAN &; TRUST CO.
CAPE FEAR & Y. VAL. R. CO.
the mechanical work of a railroad plant, this objection, no doubt, is founded on fact HIlt, to the masterful management of a railroad company, this expert knowledge alone is not sufficient One must combine with this, great business and administrative ability, 'a knowledge of finance, intimate acquaintance with the laws of trade, and a diplomatic capacity in negotiations with competing, and contracts with connecting, lines. But this kind of railroad man is very difficult to obtain, and costly when obtained. Besides this, the court, in se· lecting its receiver of a railroad, does not seek a person to take charge of and administer a road, to the end, after long experiment, of working it out of difficulties, Rind restoring it to a successful career; cer· tainly not, at least, when such receiver has been appointed in a of mortgage creditors, seeking the establishment and realization of their contract rights. All that the court can do, in such a case, is to take charge of the property under an equitable execution, ascertain and fix the legal and equitable rights of all parties interested therein according to their lawful priorities, and, when these are ascertained and fixed, to sell the property, and divide the proceeds among those entitled thereto. During this process of ascertainment and adjust· ment, it places the property in the hands of a receiver, whose duty it is to preserve it, prevent deterioration, and so manage it that the rights of its real owners shall be prejudiced as little as possible. The person selected for this duty must possess integrity of character, business experience, a knowledge of affairs, a capacity for the examina· tion ionto and comprehension of accounts, must not be partisan, and must have no pecuniary interest in anyone of the classes of creditors whose claims come before the court. Mr. Gill fills these requisites. He is of unblemished reputation. He has had large financial experi. ence, and has credit for great financial ability. He has been concerned in the construction and management of railroads, and knows railroad accounts. When he was appointed, the Mercantile Trust Company, of which he is the president, was trustee of the second mortgage. This place it has resigned, and due provision has been made for the protection of the trust. He was the owner of some first mortgage bonds. These he has parted with. At this hearing, in which his merits are being investigated, he stands an indifferent third person. It is true, he was chairman of a committee of first mortgage bondholders, which promoted this suit. But as it is admitted on all sides that a receivership was inevitable, and necessary for the protection of all the interests involved in this business, surely the promotion of a suit accomplishing this necessity cannot be imputed as a fault It is said, however, that during the period of his acting as receiver he has shown his unfitness by remo,ing the treasurer of the company and increasing the expenses of that office, by removing the agent at Mt Airy, by infrequent and hasty visits in person on the road, and by extravagant expenditure. The expressed ground of complaint against these removals is that the gentlemen removed were relatives of large stockholders. Nothing in the affidavits bearing on this point, nor in the argument, is said of the superior ability of these gentlemen for the places they filled. Indeed, nothing at all is said of their ability. The treasurer should have the absolute con-
forhiD:l,.; iTb;e@\nyer of tb.e to' fthese complaJnt$ is , The; of the tre"lilurefls office have 'from $1,800 ,.From all-that: hti$ rbeen,,discloseQ. rin case, so far, the f;in3,llcial department; f)fthis company, and a, clear' rand distinctexhihition of its warrant e;x:penditurealilIDoderate as thilk ,Necelilsa.d1.r,tbea;J:J:egationsQfthe objectors as the visits of are Oll intQrIllatiQn alld .belief. They are Plat ,and denied positively and dil'ectlyb.rtl1e receiver;;who speaks of his own knowl· edge. has been shown. ,classQt object,ions has been eloqueJltly and earnestly preased,i$d iUs ;this: : The Cape Vall'ey, Railroad is 'IH9rporation Qft,he North,C/ilrolina, owing its conception and successfvl const!J1ctiQn·titJhe patriotlceffort of her own,peqple. Some of them!pavestak.ed fortunes on this adventure. The of their illterests and the management of their property shouId,:be in· the hands. of a citizen of North Carolina, Who would en· joytheconfideuce of his,pwn people,and would labor singly for their welfare. ,But in completing their purpose the promoters of this enterprise we!'e forced to go into a 'money market, and ask the aid of other. capital. In order :to securet:b.is, they invested the lenders withcGrtatn paJ;amountrl'lghts. whicl). every court, which the debt· ors themselves, are bound to respect. Desirable as it is that every e1fOl1:should be made to th,e promoters of this road, its original stockh91ders, its unseclIred credij;ors,from any this could ·be ,only by a 10D;g aqJPinistration of.the .otthe corporationl by denying to credito,11Sholding contract liens ,their clear rights, and. by postponing a a distant day, speculating upon an·lIncertain futureJ,J,t tAe expense of the holders of prior liens. Courts are instituted for, the investigation and adjustment of rights. Sentimental considel'atiOJ,lS, howevernlllch they, may disturb the judgment of a court, slwuld ,never control it. No ,citizen of North Carolina. was named or sugge!ilted at the hearing 1:)J anyone whatever. It is a matter ofregretthatMr. Gill is not a. North Carolinian. SurelY,hQwever., all being equal, it cannot be said, in this court, th·.tthis swgle fact !lillounts toa disqualification. The appointmellt of John Gill, h,epetofore made, as receiver in this case, is herebyconfirll1ed. ,
et,at y.A.UqUSTA, & K. R. CO. et al. CENTRALTRUSl1 00. OF NEW PORT ROYAL & W. C. RY. CO. et al. I(Circuit ,Court,D.South Carolina. August 16, 1894.)
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" An entered Into for It consolidation 01 rWveral railroad companies, which was lDi i'¢ompUance with the statute (Gen. St. S. C. § was executed by each board of directors. Mod submitted to the stockliolders of the, ,several' companies. The minutes of the action of the compilllies. confirming the agreement, were in evidence, but the"minutes of the other company had been lost. The old 'stock was surrendered. and the new certificates accepted. The