know of the application is, that the certificates are issued and the damage done.
The next point to which I wish to call attention is the facility with which mortgage creditors may be injured by receiverships as at present conducted. For instance, in a large corporation in Pennsylvania, which had been for years in the hands of receivers, only going out of the custody of the court for a few months, to again return to it, the first set of receivers used the earnings of the company to purchase rolling-stock, which, when they were discharged, should have belonged to the company, but which, by a species of sophistication more legal than equitable, they managed to place in a car-trust, and when the court again took charge, the new receivers began their duties by issuing several millions of certificates, much of which money was used to pay debts contracted during the very few months the property was out of the hands of the court; and while these certificates are claimed to be a lien, ahead of the mortgages, some of this property was real estate which the mortgages did not cover.
Now, as regards the consistency of receivers, this very same corporation furnished a striking example, viz.: when the receivers first took charge, they insisted, despite many protests, on doing the following things:
1. Paying part of the principal and all of the interest on the floating debt.
2. Paying the guarantees on leased lines.
In reference to item No. 1, after much work, caused largely by the active opposition of the receivers, the court was persuaded to order that nothing should be paid on the principal, but allowed the continuance of payments of interest, the result being that a man who loaned the company, say, fifty per cent on its fifth mortgage, got his interest, while the holder of the first mortgage of the company would go without, and the holders of the subsequent mortgages get nothing, and have millions of coupons piled up ahead of them; and in this connection it would be well to take note of the peculiar preference our courts give to creditors who loan on collateral security, paying them interest when all others are refused, and allowing them to sell, no matter at what sacrifice to the debtor, the collaterals in their hands, while other creditors with equal if not superior rights are not allowed to enforce theirs.
In reference to item No. 2, we find these same receivers coming into court and protesting that they must pay the rentals of leased lines, no matter who suffers, and the next year not only refusing to pay some of these rentals, but, in some cases, asking permission to abandon the lines altogether.
But perhaps the most startling anomaly will be found in the case of two large corporations, one in Pennsylvania and the other in New Jersey, and both in the hands of the same court, where we find the