238 THE POPULAR SCIENCE MONTHLY. 



know of the application is, that the certificates are issued and the dam- 

 age 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 pres- 

 ent 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 issu- 

 ing 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 cor- 

 poration furnished a striking example, viz.: when the receivers first 

 took charge, they insisted, despite many protests, on doing the follow- 

 ins: things : 



1. Paying part of the principal and all of the interest on the float- 

 ing 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 with- 

 out, 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 suj^erior 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 aban- 

 don 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 



