(108 Neb. 698, 189 N. W. 359.)

(108 Neb. 698, 189 N. W. 359.) W. 361; Brewer v. Boston Theater, 104 Mass. 387; Wilson v. Brown, 269 Pa. 225, 112 Atl. 1; Robinson v. De Luxe Motor Car Co. 170 Mich. 163, 135 N. W. 897.

raised by answer. If not raised prior to the appointment of the receiver, it will be considered waived.

A receivership will not be terminated and the property restored to the corporate management until it can be done with due regard to the safety of all interests.

1 Tardy's Smith, Receivers, 2d ed. pp. 735-736; Morse v. Metropolitan S. S. Co. 87 N. J. Eq. 217, 100 Atl. 219; Adams v. Farmers Nat. Bank, 167 Ky. 506, 180 S. W. 807.

In a case where a receiver has been appointed on account of fraudulent mismanagement on the part of officers and directors, where the restoration of the assets to the corporation would place the complaining stockholders again under the domination of the fraudulent officers and directors, and the corporate purposes can no longer be attained, a court of equity has the power to decree a dissolution of the corporation, and wind up its affairs.

Goodwin v. Von Cotzhausen, 171 Wis. 351, 177 N. W. 618; Miner v. Belle Isle Ice Co. 93 Mich. 97, 17 L.R.A. 412, 53 N. W. 218; Green v. National Adv. & Amusement Co. 137 Minn. 65, L.R.A.1917E, 784, 162 N. W. 1056; Morse v. Metropolitan S. S. Co. 87 N. J. Eq. 217, 100 Atl. 219; Brent v. B. E. Brister Sawmill Co. 103 Miss. 876, 43 L.R.A. (N.S.) 720, 60 So. 1018, Ann. Cas. 1915B, 576; Benedict v. Columbus Constr. Co. 49 N. J. Eq. 23, 23 Atl. 485; Fougeray v. Cord, 50 N. J. Eq. 185, 24 Atl. 499; Thoroughgood v. Georgetown Water Co. 9 Del. Ch. 84, 77 Atl. 720; Sant V. Perronville Shingle Co. 179 Mich. 42, 146 N. W. 212; Northwestern Nat. Bank v. Mickelson-Shapiro Co. 134 Minn. 422, 159 N. W. 948; Arents v. Blackwell's Durham Tobacco Co. (C. C.) 101 Fed. 338; 14a C. J. 1123; State ex rel. Barton v. Farmers' & M. Ins. Co. 90 Neb. p. 671, 134 N. W. 284, Ann. Cas. 1913B, 643.

The other remedy which will prevent the appointment of a receiver must be complete, prompt, and efficient.

Columbia Nat. Sand Dredging Co. v. Washed Bar Sand Dredging Co. (C. C.) 136 Fed. 710; 1 Clark, Receivers, 133, p. 49; 8 Fletcher, Cyc. Corp. T 5262, p. 8885; High, Receivers, 4th ed. ¶ 10, p. 17.

That there is another remedy is matter of defense, and should be

1 Clark, Receivers, p. 50, ¶ 33; Re Reisenberg, 208 U. S. 90, 52 L. ed. 403, 28 Sup. Ct. Rep. 219.

The Nebraska statute relating to the appointment of receivers is an enlargement of the general equity powers of the court, and does not in the least take away those equitable powers to appoint a receiver in a proper

case.

8 Fletcher Cyc. Corp. pp. 8863, 8865; 1 Tardy's Smith, Receivers, 2d ed. ¶ 297, pp. 707–709; Northwestern Nat. Bank v. Mickelson-Shapiro Co. 134 Minn. 422, 159 N. W. 948; Ritchie v. People's Teleph. Co. 22 S. D. 598, 119 N. W. 990; Vila v. Grand Island Electric Light, Ice & Cold Storage Co. 68 Neb. 222, 63 L.R.A. 791, 110 Am. St. Rep. 400, 94 N. W. 136, 97 N. W. 613, 4 Ann. Cas. 59; State ex rel. Barton v. Farmers' & M. Ins. Co. 90 Neb. 664, 134 N. W. 284, Ann. Cas. 1913B, 643.

A stockholder is so far an integral part of the corporation that, in the view of the law, he is privy to the proceeding touching the body of which he is a member; and except in so far as a personal judgment is to be rendered against him, or in so far as an adjudication is made of the fact of his ownership of stocks, he is bound by a decree appointing a receiver, or otherwise, rendered in an action against the corporation, even though he is not personally made a party or served with process.

Commonwealth Mut. F. Ins. Co. v. Hayden Bros. 60 Neb. 636, 83 Am. St. Rep. 545, 83 N. W. 922, 61 Neb. 454, 85 N. W. 443; Howell v. Malmgren, 79 Neb. 16, 112 N. W. 313; Greenfield v. Hill City Land, Loan & Lumber Co. 141 Minn. 393, 170 N. W. 343; Hawkins v. Glenn, 131 U. S. 319, 33 L. ed. 184, 9 Sup. Ct. Rep. 739; Hancock Nat. Bank v. Farnum, 176 U. S. 640, 44 L. ed. 619, 20 Sup. Ct. Rep. 506; Hartford L. Ins. Co. v. Ibs, 237 U. S. 662, 59 L. ed. 1165, L.R.A.1916A, 765, 35 Sup. Ct. Rep. 692; Fish v. Smith, 73 Conn. 382, 84 Am. St. Rep. 161, 47 Atl. 713; Childs v. Cleaves, 95 Me. 508, 50 Atl. 717; Converse v. Ayer, 197 Mass. 455, 84 N. E. 100; General Invest. Co. v. Lake Shore & M. S. R. Co. 162 C. C. A. 296, 250 Fed. 172; Sanger v. Upton, 91 U. S. 56, 23 L. ed. 220.

In an action where a receiver is appointed, the corporation is the only

necessary party, so far as such appointment is concerned.

Ponca Mill Co. v. Mikesell, 55 Neb. 98, 75 N. W. 46; 2 Tardy's Smith, Receivers, 2d ed. ¶ 723, p. 1955; General Invest. Co. v. Lake Shore & M. S. R. Co. 162 C. C. A. 296, 250 Fed. p. 172; 8 Fletcher, Cyc. Corp. 5274, p. 8894. ¶

Where the original petition praying for the appointment of a receiver prays also for a sale of all of the assets and a winding up of the affairs of the corporation, a further petition for that purpose is unnecessary.

1 Clark, Receivers, ¶ 615, p. 689; Smith v. Burton, 67 Vt. 514, 32 Atl. 467; High, Receivers, 4th ed. p. 224. In the absence of a showing of prejudice, or that a greater price could be realized, the court will not set aside a sale because made en masse rather than in separate parcels.

First Nat. Bank v. Hunt, 101 Neb. 743, 165 N. W. 139; Northland Pine Co. v. Northern Insulating Co. 145 Minn. 395, 177 N. W. 635.

Where the court itself conducts the sale of the property, and the sale is made in open court, formal defects as to notice, order of sale, etc., are cured.

Northland Pine Co. v. Northern Insulating Co. supra.

Where an action is brought by stockholders of a corporation to prevent mismanagement by corporate officers and recover assets of the corporation fraudulently taken by such officers, and a receiver is appointed for the corporation, it is proper for such receiver to employ the stockholders' attorneys to represent him.

Tardy's Smith, Receivers, 2d ed. p. 1762; Clark, Receivers, § 536; High, Receivers, 4th ed. p. 259, § 217; Bartelt v. Smith, 145 Wis. 31, 129 N. W. 782, Ann. Cas. 1912A, 1195; Daniel v. Citizens' Mut. F. Ins. Co. 149 Mich. 626, 113 N. W. 17; Bennett v. Chapin, 3 Sandf. 673; Shainwald v. Lewis, 7 Sawy. 148, 8 Fed. 878; McPherson v. United States, 157 C. C. A. 331, 245 Fed. 40; Re Smith, 121 C. C. A. 485, 203 Fed. 369.

Aldrich, J., delivered the opinion of the court:

This is a suit in equity brought by Henry Furrer, Delbert Lautzenheiser and John Peterson, owners of preferred stock in the Nebraska Building & Investment Company, against the Nebraska Building & Investment Company, the Nebras

ka Hotel Company, the Lincoln Security Company, Frank E. Schaaf, Edward O. Gregg, H. Louis Lohmeyer, Robert W. Johnson, James H. Gore, and Albert J. Schaaf, asking for an investigation and accounting. It is also asked that the personal defendants be temporarily restrained from unlawfully and unnecessarily expending money belonging to the various corporations; that a receiver be appointed to take charge of the business, properties, assets and affairs of the several defendant corporations and all the real estate owned or held in trust by either of the defendants and belonging to the stockholders of the defendant corporations; that the receiver take immediate possession of the funds and real and personal property, and all business conducted by defendants or either of them belonging to the stockholders of the defendant corporations, and that said defendant corporations be dissolved, and the receiver be empowered to handle and dispose of such assets as may come into his hands; that the personal defendants be enjoined from further conducting and operating the business of the defendant corporations; that at the final hearing a judgment be entered against defendants Schaaf, Gregg, Gore, and Lohmeyer, in such amounts as found due from them; and that all the assets of the several defendant corporations, after paying the legal indebtedness against the same, be preserved for the benefit of such stockholders of the defendant corporations as have paid cash for their stock.

Service of summons was had on the Nebraska Building & Investment Company and the Nebraska Hotel Company by delivering in person to F. E. Schaaf, president and manager of each of said corporations, at their usual place of business, true and certified copies of the writ with all indorsements thereon. Summons was served on the Lincoln Security Company by delivering in person to F. E. Schaaf, president and general manager of said

(108 Neb. 698, 189 N. W. 359.)

corporation, a true and certified copy of the writ with all indorsements thereon. Service was also had on Frank E. Schaaf, Edward O. Gregg, James H. Gore, H. Louis Lohmeyer and Albert J. Schaaf. The statutory notice of the time and place for hearing of the application for appointment of a receiver was served on each of the three abovenamed defendant corporations by delivering in person to F. E. Schaaf, president and manager of each corporation, true and certified copies of the notice with all indorsements thereon. Service of the notice was also had on Frank E. Schaaf, Edward O. Gregg, James H. Gore, H. Louis Lohmeyer, and Albert J. Schaaf.

The trial court found that a receiver was necessary and appointed W. E. Barkley receiver for each of the defendant corporations. On April 4, 1921, the trial court authorized the receiver to offer for sale and to sell, subject to the approval of the court, the interest of the companies in the Fontenelle Hotel of Omaha, Nebraska, Lincoln Hotel, Capitol Hotel site, Lincoln, Nebraska, Evans Hotel, Columbus, Nebraska, Lincoln Hotel at Franklin, Nebraska, Lincoln Hotel at Table Rock, Nebraska, Lincoln Hotel at Scotts Bluff, Nebraska, and also the ranch owned and operated at Kearney, Nebraska. On April 5, 1921, D. W. Osborne and Herbert Reeder, holders of preferred stock in the Nebraska Building & Investment Company and the Nebraska Hotel Company, appeared specially and challenged the jurisdiction of the court to its right and authority to appoint a receiver and to make sale of the properties, claiming, among other things, that they, and more than 900 other stockholders, were affected by the proceedings, none of whom had received notice required by law, precedent to the appointment of the pretended receiver; that they had not been made parties and were not bound by the proceedings; and also that no sufficient or proper showing had been

made for the appointment of a receiver, or for a sale of the assets and the winding up of the business of the corporations. Other preferred stockholders of the Nebraska Building & Investment Company and the Nebraska Hotel Company appeared specially to challenge the jurisdiction of the court because no notice or summons had been served upon them or either of them. The special appearances were overruled. On the same day Otto Gloe and Laura A. Walters, preferred stockholders in the Nebraska Building & Investment Company, G. H. Walters, a common stockholder in both the Nebraska Building & Investment Company and the Nebraska Hotel Company, and Maurice I. Walters, a stockholder and creditor of the Nebraska Building & Investment Company, each for himself separately filed a motion of intervention objecting to the receiver's bond, claiming it should be equal to double the value of the property, as required by § 7813, Rev. Stat. 1913, and moved for an order requiring a $2,000,000 bond. Otto Gloe and others filed a motion to set aside the appointment, and a motion resisting the sale, on the ground that it was unnecessary to sell all the assets of the corporations because the sale of certain properties would meet all obligations. The same preferred stockholders filed a motion for an order directing that all stockholders and creditors of the defendant corporations be made parties defendant, claiming that they were parties affected by the receivership proceedings, and that, without notice as provided in § 7811, Rev. Stat. 1913, the proceedings were void as to the creditors and stockholders. The same intervening stockholders filed other motions resisting and objecting to the proceedings, and they were all overruled by the court.

The trial court on April 16, 1921, confirmed the sale of the hotel properties, which were sold to Eugene C. Eppley for a total consideration of $1,000,000, and the final decree of the court below was entered on