Where a mine and railroad were operated in connection with each other by the same company, certificates were issued as a charge upon both properties; liana v. Iron Co., 86 Va. 754, 11 S. E. 431.
If the order authokizing certificates for borrowing money to carry on the business does not limit their payment to any particu lar fund, the right of bona fide holders for value to resort to the general assets as against general creditors will not be qualified by a quasi-limitation apparent on the face of the certificates ; Appeal of Nekfie (Pa.) 12 Atl. 271.
When the receiver is appointed on petition of a stockholder, and earnings have been used to pay interest on the bonds, there Is no equity which requires payment of past due claims for labor and materials by the is sue of receivers' certificates therefor, payable out of the corpus of the property ; there is an equity to pay out of net earnings for la bor necessary to keep the property in actual operation, hut such earnings cannot be an ticipated by the issue of receivers' certificates unless by agreement of parties ; Street v. R. Co., 59 Fed. 25 ; nor can such certificates be issued against the opposition of first mort gage bondholders for new equipment and construction of a narrow gauge road of which new owners would manifestly change the gauge to the standard, so that the .pro posed improvements would be useless; id. Except under extraordinary circumstances, a court ought not to order the issue of receiv ers' certificates, with a prior lien, to complete an unfinished railroad ; Shaw v. R. Co., 100 U. S. 605, 25 L. Ed. 757. Such an order was made in Kennedy v. R. Co., 2 Dill 448, Fed. Cas. No. 7,706, where it was necessary to complete the road in order to secure a land grant ; and in Stanton v. Alabama & C. R. Co., 2 Woods 506, Fed. Cas. No. 13,296, to preserve a railroad and complete some incon siderable portion of it.
Certificates issued, under an order made without notice to creditors, for debts prior to the receivership, give the holders no pref erence over other creditors ; Laughlin v. Roll ing-Stock Co., 64 Fed. 25. They cannot be issued, with priority over existing mortga ges, for wages accrued before the appoint ment of the receiver or for deficiency of sup plies ; Union Trust Co. v. Souther, 107 U. S. 592, 2 Sup. Ct. 295, 27 L. Ed. 488 ; In re Eu reka Basin W. & M. Co., 96 N. Y. 49; Turner v. R. Co., 95 Ill. 134, 35 Am. Rep. 144. Cer tificates issued, not to preserve the property, but to pay unsecured claims, cannot be given priority over an antecedent mortgage; Hoop er v. Trust Co., 81 Md. 559, 32 Atl. 505, 29 L. R. A. 262 (but see RECEIVER, as to paying material and labor claims) ; when in excess of the amount authorized by the court they cannot be enforced against the property un less the proceeds were used for its benefit ; Wesson v. Chapman, 77 Hun 144, 28 N. Y. Supp. 431. They cannot be issued to pay in terest on bonds ; Newton v. Mfg. Co., 76 Fed. 418 (unless perhaps on a prior mort gage not in controversy). They may be is
sued to pay claims for supplies ; Rutherford v. R. Co., 178 Pa. 38, 35 Atl. 926 ; or to com plete and equip a railroad and pay labor claims previously incurred ; First Nat. Bank of Houston v. Ewing, 103 Fed. 168, 43 C. C. A. 150.
Allowances to receivers and their counsel as compensation for services are taxable as costs, and have priority over receivers' cer tificates; Petersburg Say. & Ins. Co. v. Della torre, 70 Fed. 643, 7 C. C. A. 310 ; and cer tificates issued under an order not giving them priority over other claims, are not en titled to preference over debts of the receiv er contracted in carrying on the business ; Lewis v. Steel Co., 183 Pa. 248, 38 Atl. 606 ; and persons taking such certificates in ex change for certificates before issued under an order giving them a preference, are not , entitled to priority even under the first or der ; id. Whether they are entitled to prior ity out of net income over a deficiency judg ment on a mortgage depends on the equities of the case and on no fixed rule ; American Trust Co. v. S. S. Co., 190 Fed. 113, 111 C. C. A. 376.
The holder of certificates is put upon in quiry as to the whole course of the proceed ings of a litigation in which they were is sued, and is Charged with notice thereof ; Mercantile Trust Co. v. R. Co., 58 Fed. 6, 7 C. C. A. 3; and when the order for the is sue was ea, parte, and the proceeds were im properly applied, a holder who made no de mand for three years and until the foreclo sure sale was confirmed and a decree of dis tribution entered, was guilty of gross lathes and estopped by the decree from asserting his claim ; id. Where defendants held re ceivers' certificates for a right of way and agreed that they should be postponed to oth er certificates to be issued to plaintiffs, hut on a sale defendants were paid for the right of way and plaintiffs' certificates were not paid in full, the latter were entitled to re cover from the defendants the amount so paid them; Fletcher v. Waring, 137 Ind. 159, 36 N. E. 896.
Holders of certificates cannot enjoin a sale under a decree in favor of an interven ing mechanics' lien creditor whose claim was prosecuted before the certificates were authorized ; Gordon v. Newman, 62 Fed. 686, 10 C. C. A. 587.
It has been held that a chancellor cannot authorize a receiver to borrow money by selling interest-bearing receivers' certificates of indebtedness at less than their face val ue; Meyer v. Johnston, 53 Ala. 237; but see Stanton v. R. Co., 2 Woods 506, Fed. Cas. No. 13,296.
Such certificates are considered as "costs of suit," in a decree directing the payment of the "costs of this suit" after the payment of the expenses of the sale ; Farmers' L. & T. Co. v. R. Co., 106 Fed. 565.
Purchasers of certificates are not bound to see to the application of the purchase mon ey ; Union Trust Co. v. R. Co., 117 U. S. 434, 6 Sup. Ct. 809, 29 L. Ed. 963. See RECEIV ER; ROLLING STOCK; MORTGAGE.