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U.S. Supreme Court

Great Western Mining & Mfg. Co. v. Harris, 198 U.S. 561 (1905)

Great Western Mining and Manufacturing Company v. Harris

No. 217

Argued April 14, 17, 1905

Decided May 29, 1905

198 U.S. 561


A receiver is an officer of the court which appoints him, and in the absence of some conveyance or statute vesting the property of the debtor in him, he cannot sue in courts of a foreign jurisdiction upon the order of the court appointing him to recover the property of the debtor. Boot v. Clark, 17 How. 338.

A receiver's right to sue in a foreign jurisdiction is not recognized upon principles of comity, as every jurisdiction in which it is sought by means of a receiver to subject property to the control of the court has the right and power to determine for itself who the receiver shall be, and to control the distribution of the funds realized within its own jurisdiction. Where the receiver cannot maintain an action to recover property in a jurisdiction other than that in which he was appointed, jurisdiction is not established because the action is authorized to be instituted by the receiver in the name of the corporation, if it appears that, in case of a recovery, the property would be turned over to the receiver to be by him administered under the order of the court appointing him.

This case was begun by bill in equity filed in the Circuit Court of the United States for the District of Vermont in the name of the Great Western Mining & Manufacturing Company, a Kentucky corporation, by L. C. Black, its receiver, against B. D. Harris, a citizen of the State of Vermont. It is averred that the corporation was duly organized under the laws of the State of Kentucky. In substance, the bill sets forth that the Great Western Mining & Manufacturing Company was organized by the Kentucky Legislature on January 19, 1856, for the purpose of owning and operating mining property and selling coal. On or about February 10, 1859, it became the owner of coal properties to the value of about $40,000 situated in Lawrence County, Kentucky. The capital stock of said company was $200,000, divided into 2,000 shares chanroblesvirtualawlibrary

Page 198 U. S. 562

of $100 each. That, previous to November 10, 1887, the capital stock of the company was owned as follows:

B.D. Harris, the defendant herein, 600 shares,

par value . . . . . . . . . . . . . . . . . . . . $60,000.00

G. D. Harris, 600 shares, par value . . . . . . . . 60,000.00

John Carlisle, 440 shares, par value. . . . . . . . 44,000.00

George W. Carlisle, 300 shares, par value . . . . . 30,000 00

James C. Holden, 4 shares, par value. . . . . . . . 400.00

Loring Hinsdale, 4 shares, par value. . . . . . . . 400.00

George S. Richardson, 52 shares, par value. . . . . 5,200.00

On November 10, 1887, the stockholders increased the capital stock in the sum of $50,000, the same being distributed among the stockholders as follows:

To B. D. Harris, 150 shares, par value. . . . . . . 15,000.00

To G. D. Harris, 150 shares, par value. . . . . . . 15,000.00

To John Carlisle, 110 shares, par value . . . . . . 11,000.00

To George W. Carlisle, 75 shares, par value . . . . 7,500.00

To George S. Richardson, 13 shares, par value . . . 1,300.00

To James C. Holden, 1 share, par value. . . . . . . 100.00

To Loren Hinsdale, 1 share, par value . . . . . . 100.00

(The record she is that this increase was in fact made on January 11, 1888, in pursuance of a meeting authorized to be called at that date in the meeting of November 10, 1887, and certificates issued January 14, 1888.)

On April 22, 1889, a further increase of capital stock was had by adding 1,000 shares of $100 each, which was distributed as follows:

To B. D. Harris, 300 shares, par value. . . . . . . $30,000.00

To G. D. Harris, 300 shares, par value. . . . . . . 30,000.00

To John Carlisle, 220 shares, par value . . . . . . 22,000.00

To George W. Carlisle, 150 shares, par value. . . . 15,000.00

To George S. Richardson, 26 shares, par value . . . 2,600.00

To James C. Holden, 2 shares, par value . . . . . . 200.00

To Loring Hinsdale, 2 shares, par value . . . . . . 200.00


Page 198 U. S. 563

The complainant avers that, at the time the increases of capital stock were made and carried out, the stockholders had formed a plan of issuing bonds and selling the same, and that the issues and distribution of said stock were made for the purpose of defrauding said company and obtaining, without consideration, the aforesaid shares of capital stock, and for the purpose of selling the same to the company in connection with the said loan and defrauding the company out of a part thereof. That said issues of capital stock were made by the shareholders and board of directors, of whom the defendant was one, ostensibly in consideration of alleged betterments of said mining property, which betterments, it was pretended, were made and paid for out of the net earnings of the company, which, it was represented, had increased the value of the property belonging to the stockholders. Complainant alleges that no such betterments had been made, and if made, they were paid for out of money borrowed upon the credit of the company, for which an indebtedness then existed and still exists. That in fact there had been no net earnings which had been put into betterments by the company, and that the issue of said stock was without consideration, illegal and void, and a breach of duty upon the part of the stockholders and the directors of the corporation to its creditors. That said stock so issued still remains outstanding in the names of the parties to whom it was issued, or their assignees. That, on May 13, 1889, the directors of the company, of whom the defendant Harris was one, and who were also stockholders in the company, for the purpose of defrauding said company and abstracting the assets of the company for their own use and benefit, the corporation then being insolvent, without means to pay its floating indebtedness, which then amounted to $100,000, or more, agreed that they would obtain a loan of $300,000 for said company, said loan to be evidenced by bonds to the number of 300, in the denomination of $1,000 each, to be secured by mortgage upon the property of the company. That the issues of stock had been made upon the consideration that certain betterments chanroblesvirtualawlibrary

Page 198 U. S. 564

had been added to the property, and had been paid for out of the profits of th