Traction Materials Co. v. Pittsburgh, McKeesport & Westmoreland Railway Co.

Citations

• 261 Pa. 153
• 104 A. 552
• 1918 Pa. LEXIS 702

Syllabus

<p>Receivers — Bad faith — Improper payments — Surcharge — Services — Compensation—Exceptions to account — Burden of proof— Continuation of husiness — Expenses—Preferred claims — Liens.</p> <p>1. Funds allowed the receiver of an insolvent corporation for necessary improvements and current expenses cannot be diverted by him to the payment of certain unsecured creditors of the corporation, thus giving 'them an unlawful preference, whether it be done directly or indirectly. .Knowingly or negligently paying a fictitious value for property will result in a surcharge of the receiver; and such charge is not relieved because the excess is applied to a preexisting indebtedness which the receiver had no authority to pay.</p> <p>2. Where a receiver of a street railway company paid $15,000 ostensibly for two ear bodies which were turned over to the road by the bondholders’ committee who had previously been in charge thereof, and it appeared that the car bodies were not worth the price paid therefor, and the payment was in reality made not only for the car bodies, but also to cover a balance due the committee for money expended on the road, the court properly surcharged the receiver with the difference between the value of the ear bodies and the amount paid for them.</p> <p>3. Where a receiver paid a State tax which had been assessed against the corporation prior to his appointment and prior to the Act of June 15, 1911, P. L. 955, dispensing with the necessity of filing a lien for taxes against the property of a corporation in order to create a lien therefor, and it appeared that the assessment of taxes had not been filed of record, the court properly surcharged the receiver with the amount of such payment where the funds were not sufficient to pay unsecured creditors in full.</p> <p>4. Where it appeared that, prior to the receiver’s appointment, a contract had been made with another traction company for the extension to its lines of defendant’s road, but before the extension wa