83 Md. 394 | Md. | 1896
delivered the opinion of the Court.
On the second of June, eighteen hundred and ninety-three, Charles W. Lord filed a bill of complaint in Circuit Court No. 2, of Baltimore City, against his copartner, Thomas F. Sprigg, alleging that the firm composed of the plaintiff and defendant was hopelessly insolvent, unable to pay its debts or to continue its business longer without wronging its creditors and seriously diminishing its ’assets ; and praying that the partnership of “ C. W. Lord and Company ” might be dissolved and that a receiver might be appointed to take charge and possession of its assets. On the same day an order was passed appointing Winfield J. Taylor receiver. The following day the receiver obtained from the Court an order authorizing and directing him to continue the business^of the firm till the further order of the Court, though this order did not empower him to buy any other new goods than were necessary to complete the manufacture of the raw materials on hand and to enable him to sell the old stock. On November the twenty-eighth of the same year the receiver made report that he had continued the business by selling' in the usual course of business and by buying such new goods as were needed by the demands of the trade. Upon this petition an order bearing the same date was passed
After the business had been carried on by the receiver up to January the fourteenth, eighteen hundred and ninety-five, it was ascertained that it was falling behind and that
With the question as to whether Mr. Taylor should be allowed any commissions or not because of his alleged mismanagement of the business ; and with the other question as to whether he shall be credited with the sums which he paid in excess of forty per cent, to the attaching creditors, we have nothing to do on this appeal. The Court below having expressly and in terms reserved these questions for future action, and having made no disposition of them whatever, nothing has been decided or determined in respect to them from which an appeal could be taken. These questions are, therefore, not before us, and as they are not before us we are without authority to' express an opinion upon them. We proceed, then, to the consideration of the only matter which the record properly brings up, and that relates simply to a controversy between two classes of the receivership’s creditors.
Now, we have said that there are altogether three classes of creditors. First, those who were creditors of C. W. Lord and Company when the receiver was appointed, and who subsequently accepted the forty per cent, composition and by whose sanction the receiver continued the business ; second, those who so being creditors of the firm, afterwards sold goods and materials to the receiver, and became, as to such goods and materials, his creditors; and third, those who not being creditors of C. W. Lord and Company be
We discover no error in this allowance. There is no question involved as to the priority of the receiver’s certificates. This Court has recently held that a receiver of a private corporation has no authority, even under an order of Court, to create liens upon the property placed in his care by the issual of certificates which will take precedence over subsisting incumbrances, Hooper v. Central Trust Co., 81 Md. 559, and the same principle equally applies to a receiver of a firm or copartnership. The sole inquiry is as to the order in which, under the circumstances of this case, the fund in Court shall be distributed between these different classes of creditors. It was obviously not the design and purpose of the orders of June the third and November the twenty-eighth, eighteen hundred and ninety-three, to empower the receiver to purchase goods on credit and then to sell them again, and out of the proceeds of sale to pay the creditors of the firm in settlement of their composition notes, to the exclusion or even to the prejudice of the persons who, not being creditors of the firm, had become creditors of the receiver on account of these very purchases. Such a mode of dealing would have been simply applying the money of one set of individuals to the payment of the debts .due to another set, though the latter had no claim whatever upon the former. The business was continued by the receiver with the sanction of the firm’s creditors and solely for their benefit. They had no claim upon the goods bought by the receiver, nor upon the proceeds of the sale thereof, except to the extent that they were the vendors of those goods. The receiver’s power was limited strictly to the purchase of
In our opinion the Court below was right in postponing these appellant creditors and in giving to the composition creditors yet unpaid a preference after the payment in full of those persons who-were creditors only of the receiver.
Finding no error in the order appealed from it will be affirmed with costs.
Order affirmed with costs above and below.