165 Wis. 435 | Wis. | 1917
The primary question presented on appeal from the various orders above mentioned is: What
The receiver’s power in administering his trust must be found in the order of his appointment, since there is no claim that this contract was specifically authorized or ratified by the court. The order of receivership provides that the receiver shall have full power and authority:
(3) “to operate and run, and to continue to operate and run, until the further order of this court, the defendant company’s said pulp mill in its usual and regular course of business in the manufacture of pulp and paper stock, and to buy and pay for all necessary materials and equipment therefor ... and (4) “to finish up any unmanufactured stock, completing it for market, where such course seems best calculated for the best interest of all parties concerned, and to manufacture pulp with said pulp mill and sell and dispose of the same in the regular course of business and to handle and collect the moneys and receipts obtained therefrom in so doing until •the further order of this court.”
The terms of the provisions of the order authorized the receiver to incur the ordinary obligations incident to the conduct of the business committed to his care. The nature of this receivership conferred certain discretionary powers on the receiver to make contracts if required to promote the business interests in his charge.1 It is well established that the receiver’s discretion in the administration of his trust is-' so limited that he cannot tie up the trust estate or prevent the court from enforcing an administration thereof in such manner as to protect the best interests of the trust. All parties dealing with a receiver are charged with knowledge of these limitations on the receiver’s power and deal with him at their peril. Any .person dealing with a receiver who' desires to make an irrevocable contract must insist that it be-
“When a receiver is authorized to carry on a business temporarily, his power to incur obligations for supplies, -materials, and other expenses in .the proper and usual conduct of such business follows as a necessary incident to the receivership. The courts, however, decline to sanction the exercise of this discretion on the part of receivers in respect to large outlays or contracts extending beyond the receivership and intended to be binding upon the trust.”
When contracts of this nature are made with a receiver they are held to be within the equitable control of the court, and subject to modification or cancellation if the court finds it necessary for the protection of the interests of the trust. As observed in Chicago D. V. Co. v. McNulta, 153 U. S. 554, 14 Sup. Ct. 915:
“The receiver being an officer of the court, and acting under the court’s direction and instructions, his powers are derived from and defined by the court under which he acts. He is not such a general agent as to have any implied power, and his authority to make expenditures and incur liabilities — : like the one in question — must be either found in the order of his appointment, or be approved by the court, before they acquire validity, and have any binding force upon the trust.”
The following cases sustain this practice: Brown v. Hazelhurst, 54 Md. 26; Lehigh C. & N. Co. v. Central R. Co. 35 N. J. Eq. 426; Vanderbilt v. Central R. Co. 43 N. J. Eq. 669, 12 Atl. 188; Brunner, Mond & Co. v. Central G. Co. 18 Ind. App. 174, 47 N. E. 686; In re Punnett C. M. Co. 24 Misc. 310, 53 N. Y. Supp. 204.
The terms of the order appointing the receiver are not broad enough to permit of the interpretation that the receiver had the power to bind the trust by contract for material to be used in conducting the business beyond the period of
By the Court. — It is so ordered.