65 F. 557 | U.S. Circuit Court for the District of Washington | 1895
The complainant, as trustee for the holders of bonds of the Washington & Columbia River Railway Company, filed his bill of complaint, setting forth a mortgage upon all the property of said corporation, given to secure payment of the principal and interest of said bonds, and alleging, in substance, that installments of interest on said bonds had become due and were unpaid; that said corporation is insolvent; that the complainant had been duly selected and constituted as trustee in place of the trustee named in said mortgage, and had been requested by C. B. Wright, the holder of more than three-fourths of said bonds, to bring this suit to foreclose said mortgage, — and praying for a decree of foreclosure of the mortgage, and sale of the property, and for the appointment of W. D. Tyler, president of said corporation, as receiver, to take immediate charge of the railway, and manage the same during the pendency of this suit. The mortgage contains provisions authorizing the trustee, in case of default in the payment of any installment of interest, to declare the whole debt due, and proceed at once to foreclose and to have a receiver appointed, and to choose a receiver. Upon application of the complainant, after notice to the defendant corporation, one of the judges of this court, ir chambers, appointed said Tyler receiver of said corporation, with power to manage the business and operate the railway; and he has accepted the appointment, and is now acting as such receiver. William M. Ladd and others, composing the firm of Ladd & Tilton, obtained leave to intervene in the suit, and thereupon filed a petition alleging that said firm holds certain bonds secured by said mortgage; that the selec
In appointing this receiver, I took into account the fact that the mortgage authorizes the trustee to choose a receiver; and I assumed that all the parties interested would be satisfied to have his nominee confirmed, but I was not controlled by these considerations. I have known Mr. Tyler personally for several years, and at the time of acting upon said application I had perfect confidence in his capacity, integrity, and fairness. I considered him a suitable person to administer the trust, and for that reason, mainly, gave ■him the appointment. And now, after having canvassed the situation in the light of the showing made by the parties, respectively, I still hold Mr. Tyler in the same high estimation, and consider that his appointment was in fact prudent. I concede that, when a court assumes control of the affairs of an insolvent corporation, it is preferable to take it entirely out of the hands of its managing officers. But there is no inflexible rule rendering such officers ineligible to appointment as receivers. I also assent to the proposition advanced by counsel for the interveners, that the rale of managing officers, whose mismanagement has resulted in bringing a corporation into a condition of insolvency, should not be perpetuated by continuing them or their subservient agents in charge as receivers. The Washington & Columbia Kiver Railway Company was organized after a sale of the railway and its appurtenances under a decree of foreclosure against another corporation, which formerly owned it, and which had become insolvent. The property transferred by said sale