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loss: Sandford v. Sinclair 8 Paige 373; the rule being that a receiver will not be appointed before answer unless it appears that there is danger to the property or fund by the insolvency of the party having possession of it, or from some other cause; but when justice requires it, and the merits appear to demand it, upon the hearing of which due notice is given, one will be appointed. West v. Swan 3 Edw. Ch. 420; Vann v. Barnett 2 Brown C. C. 158; Metcalfe v. Pulvertoft 1 Ves. & B. 180.

In Howard v. Palmer Walk. Ch. 391, the order for a receiver was granted on a special motion of which notice was given to the defendant's solicitor, who did not appear to oppose it. The case stood upon demurrer; and the court held that the demurrer was no objection to granting the order; that if the defendant had appeared and opposed the appointment on that ground, the court would have looked into the pleadings to see whether the demurrer was well taken, and if it had any doubt on the question, would have ordered the motion to stand over until the demurrer was disposed of.

In reviewing the action of a circuit judge in appointing a receiver two things will be considered: First, whether the discretion vested in him has been abused; and second, whether a right has been impaired by such appointment.

It is not easy to prescribe limits to discretionary action. There are however certain general principles by which its exercise is governed. As a general rule, it would be safe to say that when insolvency is alleged, and not denied upon the hearing of the application, and it is made to appear that there is danger that the assets will be misappropriated or wasted, a receiver should be appointed.

In this case, as before stated, the insolvency charged is not denied, and the bill of complaint makes a strong case of misappropriation, which I think the circuit judge was warranted in regarding as not overcome by the affidavits. If the defendant could be permitted to keep on converting the assets and applying them to the payment of secured or favored creditors, it may well be that when final decree was

rendered there would be nothing to distribute among the fair and honest creditors of the corporation in proportion to their respective debts, as contemplated by the statute.

Neither do I see that any substantial right has been impaired by the appointment. Ordinarily, the control and management of the affairs of a corporation will not be taken from its authorized officers before final decree; yet circumstances may exist where it may be proper to do so, and place the property in the hands of a receiver pending the litigation. This, I think, is such a case, and warranted the court below in placing the property, if any remained, in the custody of a receiver pending litigation. If there was in fact no property left to pass to the receiver, no rights can be affected. The appointment is made for and on behalf of all parties interested, and not for the benefit of the complainant or defendant merely. It determines no rights; it merely secures the property for the benefit of those who shall appear entitled to it. The affidavits filed in opposition to the motion fail to show that the corporation is engaged in carrying on its business, but do show that it is closing up its business, and is unable to carry it on for want of available means. The order of the court was made upon notice and after full hearing, and I can see no good reason for reversal.

The order appealed from is affirmed with costs, and the record remanded for further proceedings.

The other Justices concurred.

STEPHEN HENRY V. PETER FERGUSON, CHARLES FERGUSON AND JOHN HEVENER, ADM'RS FOR HOMER A.

QUACKENBUSH.

[See 38 Mich. 369; 42 Mich. 75 and 48 Mich. 415.]

Action on replevin bond—Mortgage antedating levy-Finding of ownership -Deductions-Purchasers in good faith.

1. A mortgage on a stock of goods need not be filed to establish its priority over levies subsequently made, if the mortgage was given to secure the negotiable notes of a purchaser who was not the execution defendant nor a creditor of his, and did not claim in hostility to the owner of the mortgage.

2. Where one in good faith buys a mortgage on goods without notice of prior levies thereon, his rights under it cannot be affected by the fraud of his assignee or notice thereto.

3. A finding in a replevin suit of general ownership in a specified person is only to determine rights between the parties to that suit, and is not so conclusive in a subsequent suit on the replevin bond as to establish his right to mortgage the property, especially if the mortgage postdated ownership.

4. In an action on a replevin bond a surety thereon who has become owner of a judgment under which a valid levy was made, is entitled to have the amount of the judgment deducted from the value of the replevied property if the claim was not presented with those on which the lien was grounded. So, also, property owned by the principal in the bond may be deducted, though included in the lien, if it had not belonged to the execution defendant and had gone to a bona fide holder.

5. In an action on a replevin bond it cannot be shown that property already adjudged to belong to the principal in the bond was really only held by him to sell on commission.

Error to Genesee. (Newton, J.) Oct. 14.-Nov. 20.

DEBT. Plaintiff brings error.

Reversed.

Geer & Williams for appellant.

W. B. Jackson for appellee.

SHERWOOD, J. This is an action on a replevin bond, in which Homer A. Quackenbush, now deceased, was principal and the two Fergusons were sureties.

The suit in which the bond was given was tried in 1878, and Henry had judgment. He had taken the goods as deputy sheriff of the county of Lapeer by virtue of several executions and two writs of attachment against one Parmelee. Henry's claim was a lien under these writs, and amounted to $2644.49, and judgment was taken for that amount, on his election to take the value of his interest under the lien. Execution against the defendants on this judgment was returned unsatisfied, and the plaintiff then brought this suit on the bond.

At the time the suit was brought, Quackenbush was living and was in possession of the goods, claiming a portion of them as owner. He has since died, and his interest is now represented by the administrator.

The defendants pleaded the general issue, and gave notice they would show in their defense:

First. That the levies under which the plaintiff claimed were fraudulent and void, and gave him no lien upon the property taken.

Second. That $1500 worth of the goods taken by the plaintiff under his pretended levy were not the goods of Quackenbush, but were held by him at the time for sale on commission.

Third. That at the time the goods were taken by plaintiff the defendant Charles Ferguson had a mortgage lien upon them for the sum of about $4000, which was prior in time to the plaintiff's pretended services.

These several defenses are claimed to be admissible under the following provisions of our statute, viz.:

"In any action prosecuted on such bond given by the plaintiff in an action of replevin, for the deliverance of any property, the defendants may show, in mitigation of the damages, that the obligee in such bond had only a lien upon, or special property, or part ownership in said property at the time of commencement of suit in replevin, and that the defendants, or either of them, had at the same time a part ownership or other valuable interest in said property; and if

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such lien, special property, part ownership, or other interest of said obligee, with interest thereon, amount to less than the value of the property replevied, a corresponding reduction shall be made from such value." How. Stat. § 8354.

The plaintiff failed on the trial, and brings the case here on error, the record containing substantially all the evidence. It appears from the testimony that Parmelee's business from January till September, 1874, was principally selling hardware and agricultural implements in Imlay City, and Homer A. Quackenbush was his clerk; that on the 11th of August, 1874, Parmelee sold and transferred by bill of sale. his stock of goods of all kinds to defendant Peter Ferguson, who thereupon took possession of them, and hired Quackenbush to take charge of the business; that on the 24th of August, 1874, Peter Ferguson sold the goods to Quackenbush and took back a mortgage thereon for $4000. Afterwards, Peter transferred the mortgage to the defendant Charles Ferguson, who was his brother, and received in exchange some hotel property in Marlette, in Sanilac county. Charles subsequently took the property for the mortgage, and gave up the notes to Quackenbush. Charles sold and disposed of the goods, and had the avails thereof.

Five judgments were obtained against Parmelee, as follows:

1st. January 27, 1874, for $716.14 and costs; execution issued and levied on the goods claimed by Quackenbush, February 10th following.

2d. Judgment, January 28, 1874, for $209.52 and costs; execution issued thereon and levied upon the same goods February 10th, thereafter.

3d. Judgment, January 29, 1874, for $131.17 and costs; execution issued thereon and levied upon same goods, February 12th thereafter.

4th. Judgment, June 1, 1874, for $463.23 and costs; execution issued and levied upon same goods same day.

5th. Judgment in justice's court, August 25, 1874, for $62.50 and costs; execution levied upon same property, September 18th following.

6th. Attachment issued September 19, 1874, for $485.66 and costs, and levied same day on same goods.

55 MICH-26

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