Central Trust Co. v. Tappan

Hardin, P. J.

After the property passed into the possession of the receiver, he held the same as an officer of the court, subject to its direction and control. The power of the court to authorize a receiver to issue certificates of indebtedness, and to borrow money thereon to be used for the purposes mentioned in the petition, existed. Raht v. Attrill, 106 N. Y. 436, 13 N. E. Rep. 285; Wallace v. Loomis, 97 U. S. 146. In the Raht Case the court recognizes the “right of the court to provide for the payment of certain debts contracted before or after the appointment of a receiver out of the income, and, if that is inadequate, out of the corpus of the property.” The petition and affidavit used at the special term did not fall “short of disclosing any extraordinary emergency which called for extraordinary methods for the preservation of its property.” Opinion of Andrews in Raht v. Attrill, page 432, 106 N. Y., and page 284, 13 N. E. Rep. In the case from which we have just quoted such a disclosure was not made, and therefore the order fell. In this case there was no money in the treasury, and there was no working capital on hand to pay current expenses, and the railroad company was without credit, had no rolling stock, excepting a locomotive, upon which there was a vendor’s lien of $4,775, and one car for which a very high rental was being paid, when the receiver came into possession of the property. For its proper preservation and ordinary operation he needed moneys to protect the interest of all parties interested in the same. Under such circumstances we incline to the opinion that the discretion of the special term took the proper direction. We think the case of Fosdick v. Schall, 99 U. S. 235, is authority for declaring the certificates authorized, paramount liens. The same principle was asserted in Kennedy v. Railroad Co., 2 Dill. 448. Because it appears to us that the plaintiff, the trustee, and the railroad company and the receiver and bondholders do not question the order, we need not pass upon any question which might be made in their behalf in respect to the order. As against the appellant Tappan we think the order was right, and we therefore affirm the same, with costs. Order affirmed, with $10 costs and disbursements.

Merwin, J., concurs.