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# A SOUND RULING.
Receiver for Kaupisch Creamery Company Refused.
Oregon Statute Does Not Authorize Appointment of Receiver for Insol-
vent Corporation.
Judge Cleland, of Portland, has denied the petition for the appointment of a receiver to take charge of the affairs of the Kaupisch Creamery Company, on the ground that there was no showing in the complaint to warrant the appointment of a receiver under the law. The petition was filed by J. C. Margarth, H. W. and M. M. Kaupisch, stockholders in the concern, who alleged that they and M. C. Banfield and Thomas Rand, and other stockholders, were unable to transact business together, and that the company was in imminent danger of becoming insolvent. It also stated that numerous attachments had been filed by creditors.
Receivers have frequently in the past been appointed on petitions of this kind, and the decision of Judge Cleland refusing to appoint the receiver was a surprise to counsel for the petitioners. The statute upon the subject of receivers is as follows:
"A receiver may be appointed in any civil action, suit or proceeding other than an action for the recovery of specific personal property."
"Previously before judgment or decree on the application of either party, when his right to the property which is the subject of action, suit or proceeding, and which is in posession of a third party, is probable, and the property or its rents or profits are in danger of being lost or materially injured or impaired. "In cases provided for in this code, or by other statutes, where a corporation has been dissolved or is insolvent, or is in imminent danger of insolvency or has forfeited its corporate rights."
This last clause fits the present case, but there is a missing link which destroys its intent. It begins by saying: "In cases provided for in this code, or by other statutes." This means that other statutes will relate when it is proper to appoint a receiver under this clause of the law, but, unfortunately, there are no other statutes upon the subject. There has been a lack of legislation upon the question. Such is the way Juge Cleland views the case, and why he declined to appoint a receiver on the petition presented.
It is true there are receivers now in office in like cases, the Portland Savings bank for instance, Portland hospital, Brower & Thompson Lumber Company and a great many others. Attorneys Bloomfield and Joseph, for the petitioners, called attention to those cases, and strongly urged that the statute is plain that a receiver be appointed when a corporation is in imminent danger of insolvency, so as to protect the stockholders, and it was contended in this case that the assets largely exceeded the indebtedness, and that the property, if judiciously handled, would pay all of the debts, and the petitioners also realize something. The appointment of a receiver was proper under these circumstances.
Attorneys Wirt Minor, A. King, Wilson and Cecil Bauer, representing attaching and other creditors, argued considerably according to the court's opinion of the law that a receiver could not be appointed on the showing presented. Judge Cleland has previously expressed himself upon this law in passing upon another case, so his ideas in the matter are known to many members of the bar.
He adhered to his former recent opinion in refusing to appoint a receiver in this proceeding.
The question was raised in the Portland hospital receivership. In that case the company which holds a mortgage on the building tried to defeat the claims of certain creditors against the receiver, on the plea that the appointment of the receiver, to begin with, was illegal. Judge Cleland held that while that was deubtless true, the receivership was a fact, and had been permitted to exist and do business without any protest by the mortgage company or any one else interested, and they were stopped from raising the issue now. The court would probably make the same ruling in the Portland Savings bank, and other receivership cases, but Judge Cleland, while holding that the old receiverships of this kind will stand law, does not intend to appoint any more such receivers.
Judge Cleland also made a ruling, not long ago, different from that formerly in vogue, in the matter of the appointment of receivers to collect rents during the pendency of a mortgage foreclosure suit. Previously this was frequently done on application of the mortgagee.
Judge Cleland has decided that a mortgagor is entitled to all of the rents until the property is foreclosed upon, and the mortgagor has been sold out, and has declined to appoint such receivers.
