as well as all books of account, books of record of said corporation, accounts, deeds, bonds, mortgages, certificates of stock, vouchers and papers of every nature and description belonging to said corporation, and that said receiver, or either or any of the parties to this cause, have leave to apply to the court from time to time for such further order or direction as may be necessary."

The receiver qualified and the Prentiss Lumber Company appealed.

Jurisdiction is conferred upon the court of chancery in behalf of a creditor who has obtained judgment at law, and who has been unable to collect the same upon execution, in whole or in part, to compel a discovery of any property or things in action belonging to the defendant, and of any property, money or things in action due to him or held in trust for him, and to prevent the transfer of any such property, money or things in action, or the payment or delivery thereof to the defendant, except where such trust has proceeded from some person other than the defendant. How. Stat. § 6614. The next section provides that the court shall have power to compel such discovery and to prevent such transfer, payment or delivery, and to decree satisfaction of the amount remaining due upon such judgment out of any property, money or things in action belonging to the defendant, or held in trust for him-with the exception above stated—which shall be discovered by the proceedings in chancery, whether the same were originally liable to be taken in execution or not, except property exempt from execution.

These provisions relative to judgment creditors were originally adopted into our statutes from those of the state of New York. 2 Rev. Stat. tit. 2, pt. 3, art. 2, §§ 38, 39. The construction given to the law and practice in such cases by the courts of that state is therefore entitled to great weight. Under the practice of the court of chancery of New York state, if the equity of the bill filed by judgment creditors after the return of execution unsatisfied was not denied upon the application, it was almost a matter of course to appoint a receiver, pending the litigation, to preserve and protect

the property for the benefit of whoever should be entitled to it under the decree of the court. Osborn v. Heyer 2 Paige 343; Bloodgood v. Clark 4 Paige 574; Fitzburgh v. Everingham 6 Paige 29; Bank of Monroe v. Schermerhorn Clark Ch. 214. Under a similar statute the court of chancery in New Jersey held the same doctrine. Fuller v. Taylor 2 Halst. Ch. 301. The same practice prevailed in suits by judgment creditors in the English courts of chancery. Middleton v. Dodswell 13 Ves. 266. It is the duty of the complainant who has obtained an injunction in such suit to apply for a receiver without delay. Osborn v. Heyer and Bloodgood v. Clark supra; Philips v. Atkinson 2 Brown C. C. 272; Read v. Bowers 4 Brown C. C. 441; Waters v. Taylor 15 Ves. 10.

If the case is a proper one for a receiver, the denial by the defendants that the corporation has any property or effects of any kind is no bar to the exercise of the jurisdiction. If the denial in this respect ultimately proves true, the defendant is not injured and the complainant proceeds at the peril of being obliged to pay costs. This was the principle laid down in the foregoing cases in New York, and in Fuller v. Taylor supra.

That a judgment creditor's bill can be maintained under the foregoing provisions of the statute, there can be no doubt. A corporation is treated as a person, and the statute prescribing the rules for the construction of statutes provides that "the word 'person' may extend and be applied to bodies politic and corporate, as well as to individuals." How. Stat. § 2, subd. 12. This construction is consistent with the manifest intent of the Legislature, and has been applied in many instances to corporations as falling naturally within its scope.

It is proper to consider other provisions of the statute with. reference to judgment creditors of corporations. How. Stat. ch. 281, § 3, [§ 8150] enacts that the circuit court within the proper county shall have jurisdiction over directors, managers, trustees and other officers of corporations, and over any persons who may have held such offices in any corporation, provided that proceedings are commenced within one year after

they have ceased to be such directors, managers, trustees and other officers:

First. To compel them to account for their official conduct in the management and disposition of the funds and property committed to their charge.

Second. To decree and compel payment by them to the corporation whom they represent, and to its creditors, of all sums of money and of the value of all property which they may have acquired to themselves or transferred to others, or may have lost or wasted by any violation of their duties as such directors, managers, trustees, or other officers. *

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Seventh. To set aside all alienations of property made by the trustees or other officers of any corporation contrary to the provisions of law, or for purposes foreign to the lawful business and objects of such corporations, in cases where the persons receiving such alienation knew the purpose for which the same was made.

Eighth. To restrain and prevent any such alienation in cases where it may be threatened or there may be good reason to apprehend that it is intended to be made.

Section 5 enacts that the jurisdiction conferred in the third section of the chapter shall be exercised as in ordinary cases on bill or petition, as the case may require or as the court may direct, at the instance (among others mentioned) of any creditor of such corporation; and section 6 provides:

"Whenever a judgment at law, or a decree in chancery, shall be obtained against any corporation, incorporated under the laws of this State, and an execution issued thereon shall have been returned unsatisfied in part or in whole, upon the petition of the person obtaining such judgment or decree, or his representatives, the circuit court within the proper county may sequestrate the stock, property, things in action and effects of such corporation, and may appoint a receiver of the same.

These statutes are in pari materia and must be construed together. The bill in this case is framed, not only as a judgment creditor's bill in the ordinary signification of that term, but it is framed to invoke the jurisdiction conferred by chapter 281. The stock of an insolvent corporation constitutes a trust fund for the payment of its creditors. The same has sometimes been said with reference to the other

property of an insolvent corporation. Among the creditors of such corporation equality is equity. The statute recognizes this maxim and declares that the court shall, upon final decree, cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among the fair and honest creditors of such corporation in proportion to their respective debts. Any creditor of the corporation is entitled to come in by bill or petition and establish his claim and share in the assets, and this he may do, although the bill is not filed in behalf of all creditors or of such as should come in and share the expense.

The statements in the bill amply sustain the jurisdiction of the court; and although the affidavits of the defendants. deny all fraud and misapplication of the funds of the corporation, they fail entirely to deny the main facts which entitle the complainant to the relief afforded under that statute. They do not deny the obtaining of the judgment, and issue and return of the execution unsatisfied in part. They do not deny that the corporation is insolvent. They do not deny that it ceased to carry on its business more than four months previous to the filing of the bill; although there is a qualified denial of this fact in the affidavit of Mr. Prentiss. He says that he "denies that said company ceased to do business more than four months ago." But he immediately proceeds to show his meaning of such denial by saying: "but says that said company has been closing up its affairs, reducing its assets to cash and paying its creditors as rapidly as it can." He also says "that said corporation was unable to carry on the business of manufacturing lumber at its said mill during the coming season for want of available capital." So it may safely be said that the allegation that the corporation had ceased to carry on business for more than four months stands uncontradicted.

The affidavits of the defendants show affirmatively that the defendant corporation is proceeding, through its officers, to convert its assets into money as rapidly as possible, and to pay off certain of its creditors. It being insolvent, such action must result in the payment of some to the exclusion

of others. Such conduct in behalf of its officers, although legal and proper before a bill is filed against it by a judgment creditor whose execution is returned unsatisfied, becomes improper after the filing of such bill. From that time no unsecured creditor is entitled to a preference over others. The object of the statute is to bring all the property of a corporation so circumstanced within the control and disposition of the court, to the end that it may be distributed equally and ratably among all the honest creditors of the corporation. According to the affidavits of the defendants they have used all diligence to convert the assets and apply them to the payment of the creditors of the corporation, but whether to the secured creditors or to the unsecured they do not say; and with such diligence and dispatch have they prosecuted this object that they swear that the corporation has now no property, equitable interests or things in action remaining, exclusive of prior just liens thereon, which can be applied to the payment of complainant's debt.

The defendant, however, insists that a receiver will in no case be appointed when the issue stands on demurrer, and Cook v. Detroit & Milwaukee Railroad Co. 45 Mich. 453, is relied upon as supporting that position. The facts in that case were different from those in the present one. The receiver in that case was appointed ex parte while the issue stood upon demurrer. The defendant was exercising its corporate functions and conducting its business as usual. The court below decreed on this ex parte application that the stock, property, things in action and effects of the defendant "be and the same hereby are sequestered," and it not only appointed a receiver without giving the defendants an opportunity of be. ing heard, but decreed a sequestration of the railroad company's property. Courts of equity are always averse to appointing receivers upon an ex parte application without notice to defendants whose rights are to be affected. It inust be an extraordinary case which would justify such appointment ex parte, and some special circumstances must be shown to exist which would render it necessary to put a receiver in possession of the debtor's property to prevent irreparable