Finance Co. of Pennsylvania v. Charleston, C. & C.R. Co.

• Decision Date: 25 February 1891
• Citation: 45 F. 436
• Parties: FINANCE CO. OF PENNSYLVANIA et al. v. CHARLESTON, C. & C.R. Co.
• Court: U.S. Court of Appeals — Fourth Circuit

45 F. 436

FINANCE CO. OF PENNSYLVANIA et al. v. CHARLESTON, C. & C.R. Co.

United States Circuit Court, D. South Carolina.

February 25, 1891

Samuel Lord and J. N. Nathans, for complainants.

Newman Erb, Mitchell & Smith, Smythe & Lee, and G. W. McCormack, for defendants.

BOND J.

This is a motion for the appointment of a permanent receiver for the defendant railroad company. At the outset, upon the filing of the bill, it was absolutely necessary, in the interest of the creditors and mortgagees of the defendant company, to appoint a receiver immediately. The railroad extended over three states, and passed through several counties in each, where courts were in existence, having jurisdiction to adjudicate claims arising within their territorial limits. Manifestly it was of the utmost importance that the control of the line should be in one place and under one jurisdiction. Endless confusion would otherwise have arisen. Questions of priority of liens, and of the rights of different parties, could be thus uniformly determined, and while the sale of the road as an entirety, if the result of the litigation should result in a sale, might produce a fund for distribution among creditors, the sale of so much of it as the courts of the state had within their respective jurisdictions would result in failure. The appointment of the temporary receiver made at the suggestion of complainants, whose counsel he was, because he was a person well known to the court as a lawyer of great ability and of unquestioned integrity, and his conduct of affairs since his appointment has justified in the highest degree the confidence of both the complainants and the court. But it has been the uniform practice in this circuit to appoint no one receiver of a railroad corporation who has been one of its officers, or who had anything to do with its control prior to its insolvency. It has always been thought that while the insolvency of the company might have been caused by misfortune, and by no default of its direction, nevertheless those who were about to lose their property, or had it placed in jeopardy, were entitled, in all reason and fairness, to a new management, though perhaps not a better one. In the one case, there is some hope; in the other, there can be expected the former result. Now, where we have the names of three persons suggested to us by parties in interest, for appointment as permanent receiver, we think, while we...