This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A receiver is an officer of the court, especially appointed, to whom is committed the control and management of property which is in the custody of the law. As he is not the agent of either party he cannot bind either personally by his contracts,1 nor can his acts amount to ratification by them.2 The only question then, is as to his right to make contracts which will be a lien on the trust funds in his charge, and will not bind him personally. Contracts made by a receiver in his official capacity and under order of court, are "sui generis."3 Under proper circumstances a receiver acting under order of the court may incur debts, which will not bind him. personally but will be a lien upon the fund.4 If no rights of lien-holders intervene, the receiver of a private corporation may be authorized to borrow money and make such debt a first lien upon certain trust property; as by pledging collateral to secure a loan.5 So the court may by its order make a debt incurred by the receiver a lien upon the product manufactured by the receiver.6 The assent of creditors to the appointment of a receiver and to the powers conferred upon him may prevent them from attacking the validity of contracts made by him under such powers. If the court when having power to act, has authorized a receiver to make certain contracts and has properly made the debt arising from such contract a lien upon certain property, the court cannot revoke such power after such contract has been made. "Contracts of a receiver made with express or implied authority cannot be annulled at the pleasure of the court."7 If the receiver of a going concern enters into a contract with a bank for borrowing money and depositing collateral security, and such contract is made under order of court and with consent of the creditors, the court must on the final settlement allow the bank priority as to such collateral.8 No personal liability exists against the receiver while acting under order of the court.9 Thus if the receiver employs an attorney in his official capacity, and the court sanctions such employment and fixes the compensation of the attorney, the latter cannot maintain an action against the receiver personally.10 The compensation of an attorney thus employed is to be fixed by the court.11 If a corporation is dissolved the receiver may, under order of the court, complete a contract entered into by such corporation and collect compensation therefor under the contract.12 The receiver of a corporation is not liable officially on a lease made by the corporation unless he adopts such lease.13 If he takes possession of the leased premsies he is liable for a reasonable compensation, but not on the covenants of the lease as an assignee of the term.14 A creditor who wrongfully procures the appointment of a receiver and prolongs the receivership unreasonably may be required, if he has received all the funds collected by the receiver, to pay the rent of premises used by the receiver.15
28 Ellis v. Stone, 4 Tex. Civ. App. 157; 23 S. W. 405.
29 Windon v. Stewart, 43 W. Va. 711; 28 S. E. 776.
30 Ray v. McGinnis, 81 Ind. 451.
31 Manion v. Ry. Co., 99 Ky. 504: 36 S. W. 530; Worthington v. Worthington (Ky.), 35 S. W. 1039.
32 Johnson's Appeal, 71 Conn. 590; 42 Atl. 662; Davis v. Beall. 21 Tex. Civ. App. 183; 50 S. W. 1086.
33 Hanover National Bank v. Cocke, 127 N. C. 467: 37 S. E. 507.
34 Maelay v. Assurance Society, 152 U. S. 499.
34 Fortune v. Killebrew, 86 Tex. 172; 23 S. W. 976.
36 Williams v. Bonner, 79 Miss. 664; 31 So. 207.
37 James v. Lane, 33 N. J. Eq. 30.
38 Noble v. Runyon, 85 111. 618.
39 Caldwell v. Young, 21 Tex. 800. Contra, Reading v. Wilson, 38 N. J. Eq. 446.
1 Farmers' Loan Co. v. R. R. Co., 31 Or. 237; 65 Am. St. Rep. 822; 38 L. R. A. 424; 48 Pac. 706.
2 Groveland Improvement Co. v. Supply Co., 25 Wash. 344; 87 Am. St. Rep. 755; 65 Pac. 529 (especially if the receiver is ignorant of the facts giving the party a right to avoid).
3 Vanderbilt v. R. R., 43 N. J. Eq. 669; 12 Atl. 188.
4 Girard, etc., Co. v. Cooper, 51 Fed. 332; Vanderbilt v. R. R., 43
N. J. Eq. 669; 12 Atl. 188; State Bank v. Machine Co., 99 Va. 411; 86 Am. St. Rep. 891; 39 S. E. 141.
5 Clarke v. Banking Co., 54 Fed. 556; State Bank v. Machine Co., 99 Va. 411; 86 Am. St. Rep. 891; 39 S. E. 141.
6 American, etc., Co. v. German, 126 Ala. 194; 85 Am. St. Rep. 21; 28 So. 603.
7 State Bank v. Machine Co., 99 Va. 411, 417; 86 Am. St. Rep. 891; 39 S. E 141.