for the receiver, without contributory negligence, but for which the receiver is not responsible; 26 and in Ireland, to spend money in relieving and giving employment to poor tenants, for the reason that they may be enabled in the future to pay their rent more regularly," have been given to receivers. The order appointing a receiver of land usually contains a clause empowering him to set and let the same. 28 Even with this, it seems that without special authority he cannot let any part thereof so as to bind the estate for a longer period of time than is authorized by the Statute of Frauds,29 but that a lease made for a longer time would bind a tenant who had accepted it.30 It is doubtful whether a receiver has the right to use a patent under a license given the person over whose estate he was appointed." A receiver of a dissolved corporation may sustain a bill to compel the assignment to him of a patent by the legal owner when the corporation had the equitable title to the same.32 The court may authorize a receiver of a corporation to make any contract within the corporate powers, provided, at least, that it does not bind the property after the receivership is terminated.33

§ 246. Powers of receivers of railroads.- Very extensive powers are often granted to the receivers of railroads. And in a carefully considered opinion, Mr. Justice Bradley said: "It

26 Missouri Pac. Ry. Co. v. Texas & P. Ry. Co., 33 Fed. R. 701; s. C., Blaener, Intervenor, 41 Fed. R. 319, limited by Thomas v. East Tenn., V. & G. Ry. Co., 60 Fed. R. 7.

27 Jackson v. Jackson, 2 Hogan, 238. 28 Daniell's Ch. Pr. (2d Am. ed.) 1989. 29 Kerr on Receivers (2d Am. ed.), 210, 211.

ered to do the same. Maxwell v. Akin, 89 Fed. R. 178.

§ 246. Davis v. Gray, 16 Wall. 203, 219, 220; Cowdrey v. Railroad Co., 1 Woods, 331, 336. See Railroad Receivers in Federal Courts, by Judge Caldwell, 44 Am. Law Rev. 161. Where an order appointing a receiver of a railroad company directed that "all the books, vouchers and papers touching the operation of the railroad," and "all and every part of the properties, interest, effects, moneys, receipts, earnings" of the railroad,

30 Dancer v. Hastings, 4 Bing. 2; Kerr on Receivers (2d Am. ed.), 211. 31 Compare Montross v. Mabie, 30 Fed. R. 234, with Curran v. Craig, 22 Fed. R. 101. 32 McCulloh v. Association Horlo- should be delivered to the receiver, gerie Suisse, 45 Fed. R. 479.

33 South Carolina & G. R. Co. v. Carolina C. E. & C. Ry. Co. (C. C. A.) 93 Fed. R. 543, 553. Where the board of directors may assess the stockholders, the receiver may be empow

held, that the order included the company's seal and all records of its past transactions and books relating to its previous history. American Const. Co. v. Jacksonville, T. & K. W. Ry. Co., 52 Fed. R. 937. The re

may be laid down as a general proposition, that all outlays made by the receiver in good faith, in the ordinary course, with a view to advance and promote the business of the road, and to render it profitable and successful, are fairly within the line of discretion which is necessarily allowed to a receiver intrusted with the management and operation of a railroad in his hands. His duties, and the discretion with which he is invested, are very different from those of a passive receiver, appointed merely to collect and hold moneys due on prior transactions, or rents accruing from houses and lands. And to such outlays in ordinary course may properly be referred, not only the keeping of the road, buildings, and rolling stock in repair, but also the providing of such additional accommodations, stock, and instrumentalities as the necessities of the business may require, always referring to the court, or to the master appointed in that behalf, for advice and authority in any matter of importance, which may require a considerable outlay of money in lump; and except in extraordinary cases, the submission by the receiver of his accounts to the master at frequent intervals, whereby the latter may ascertain from time to time the character of the expenditures made, and disallow whatever may not meet with his approval, will be regarded as a sufficient reference to the court for its ratification of the receiver's proceedings. In extraordinary cases, involving a large outlay of money, the receiver should always apply to the court in advance and obtain his authority for the purchase or improvement proposed." 2

ceiver appointed in a suit to foreclose a railway mortgage has no right to collect or retain moneys earned by the railroad before his appointment, although paid subsequently to such appointment; where the mortgage contains a clause allowing the mortgagor to remain in possession and collect and use its revenues before default, and the receiver does not represent judgment creditors. Hook v. Bosworth, 64 Fed. R. 443, 449.

2 Cowdrey v. Railroad Co., 1 Woods, 331, 336. This language has been thus construed in a case in a State

court: "This rule, it will be observed, simply prescribes what expenditures, out of the fund in his hands as receiver, the court will recognize as legitimate and proper when the receiver comes to account for the administration of his trust, but nothing here said gives the slightest support to the notion that the receiver may, in virtue of the power of his office, make a contract, without the authority of the court, which will bind the trust, or which the court will be bound to recognize without regard to its necessity or propriety. A receiver may, undoubtedly, appropri

It has been held that the receiver is not obliged to obtain special authority from the court to make contracts for ordinary supplies or accommodations needed for the operation of the railroad; such as equipment, repairs, the use of the roundhouses and terminals, and the employment of an agent to solicit business; and that such contracts, although subject to review by the court, will not be set aside unless the charges are unreasonable, unusual, or extravagant. The receiver is justified in paying such claims for the loss of freight upon proof by the affidavits of the shippers without any application to the court, where that is the usual course of business by railway and express companies. A loan to a receiver whom the court has not authorized to borrow money will be denied priority. A receiver cannot make a permanent traffic agreement without the authority of the court. It has been held that the court has power to authorize the receiver of a railroad company under proceedings for a foreclosure, to ratify a contract previously made by the corporation giving a telegraph company certain privileges upon its road; and that the contract thus ratified will be binding upon purchasers of the railroad at a foreclosure sale; that such a receiver may be authorized to complete the construction of a line of railroad, and to borrow money for that purpose, to purchase a lien upon part of its property, and

ate moneys in his hands belonging to the trust to such purposes, connected with the trust, as he may think proper, always taking the risk that the court will finally approve his action, but he has no authority to bind the trust by contract without the authority of the court. Until his contracts are approved or ratified by the court, the court is at liberty to deal with them as to it shall appear to be just, and may either modify them or disregard them entirely. This, in my judgment, is the only safe rule which can be adopted." Van Fleet, V. C., Lehigh Coal & Nav. Co. v. Central R. of N. J., 35 N. J. Eq. 426, 429. To a similar effect is Union Tr. Co. v. Ill. Mid. Ry. Co.. 117 U. S. 434. 3 South Carolina v. Port Royal & A. Ry. Co., 89 Fed. R. 565, 572, 574.

4 Central Tr. Co. v. Colorado Mid. Ry. Co., 89 Fed. R. 560, 564.

5 Union Tr. Co. v. Ill. Mid. Ry. Co., 117 U. S. 434, 477.

6 Investment Co. of Phila. v. Ohio & N. W. Ry. Co., 4 Fed. R. 378.

7 W. U. Tel. Co. v. Atl. & Pac. Tel. Co., 7 Biss. 367.

8 Kennedy v. St. P. & P. Ry. Co., 2 Dill. 448; infra, § 247. See also Smith v. McCullough, 104 U. S. 25; Allen v. D. & W. R. Co., 3 Woods, 316. It has been held that a railroad receiver may be authorized to pledge securities which are the property of the corporation as collateral for a loan, and to incur liability for the expenses of a scheme to refund the corporate indebtedness. Clarke v. Central R. & B. Co., 54 Fed. R. 556.

to assume a lease of a connecting railway, even without notice to the mortgagee.10 Without authority from the court a re

9 Farmers' L. & Tr. Co. v. Burlington & S. W. Ry. Co., 32 Fed. R. 805. See also Central Tr. Co. v. Wabash, St. L. & P. Ry. Co., 34 Fed. R. 259; Central Tr. Co. v. Wabash, St. L. & P. Ry. Co., 23 Fed. R. 863; Easton v. Houston & T. C. Ry. Co., 38 Fed. R. 784. The rules which should regulate a receivership of a consolidated railroad holding leased lines with separate mortgages upon the different branches, as well as a general mortgage upon the whole system, were thus stated in an opinion of Judge Brewer, delivered when denying an application by a receiver of such a system of railroads for leave to reject such leased roads as were unprofitable: "This Wabash road is composed of many subdivisions. While it is a single corporation today, yet into it have passed many corporations and many separate railroad properties. In administering such a consolidated property, the court must look at, not merely the interest of the mortgagee in this general mortgage, or of the mortgagor as a single entity or corpora tion, but also the separate and sometimes conflicting interests of the various subdivisions and their respective incumbrances, and, back of all that, the duty which every railroad corporation owes to the public. For underlying the rule which the Supreme Court has laid down in respect to the payment, by receivers when they take possession of the railroad property, of prior unsecured debts recently accrued, runs the thought, as expressed by the Supreme Court, that a railroad corporation owes a duty to the public, which has given it its franchise and enabled it to construct its road, the duty of operating that

road for the benefit of the public.
While that may not be what you call
an absolute duty, enforceable under
all circumstances, it is still a duty
to be regarded and enforced by the
courts when they take possession of
railroads through their officers. And
that duty is not limited to the oper
ation of merely that particular frag-
ment of a road which is pecuniarily
profitable in its operations, but it ex-
tends to the road as an entirety, and
to all its branches,- all its parts; dif-
fering in that particular from the
duty which would rest upon the
court if it had simply taken posses-
sion of property used for private pur-
poses, manufacturing or otherwise,
where the single question might well
be said to be one of pecuniary profit.
This Wabash road, as a system, was
in operation, a going concern, from
one end to the other; as such, dis-
charging its duties as best it could to
its various creditors. This court, at
the instance of the corporation, and
to preserve the integrity of the sys-
tem, took possession of it by its re-
ceivers. It took possession of it as a
going concern, and, so far as is rea-
sonable and practicable, it should
continue it as a going concern until
it surrenders it to whoever may be
the purchasers or future holders of
it. With that preface, and calling
these separate branches which have
passed into this consolidated road,
subdivisions, since some have passed
in by way of lease and others by way
of consolidation, subject to separate
mortgages, we pass orders substan-
tially as follows: The first is one
which has already been entered, and
we simply emphasize it by repeating
it, that subdivisional accounts must
be kept separately.
That was an

10 Mercantile Tr. Co. v. Mo., K. & T. Ry. Co., 41 Fed. R. 8, 11, 12

ceiver of a railroad cannot lease offices for a term of four years. Such authority is not included in the grant of power to make all contracts that may be necessary in carrying on the business of the railroad," nor is the lease ratified by the approval of monthly accounts showing payment of rent under the lease.13 § 247. Receiver's certificates.- Where it is absolutely necessary to raise money for the preservation of the property in his hands, a receiver may be empowered by the court to issue certificates which give their owners a lien upon the property