Argument for Appellants. mortgaged property was thereupon sold, but no surplus re alized. The net earnings of the Wabash system from the time the receivers took possession to the time when they surrendered the road of the Quincy Company were $1,012,857.39, which was $3,304,633.61 less than the amount of preferred debt existing when the receivers took possession. The petitions of the trustees Gilman and Bull and of the Quincy Company were referred to a master who reported against the claims therein set forth. Exceptions were argued before the Circuit Court and overruled, the report confirmed and the petitions dismissed, whereupon the petitioners brought the case by appeal to this court. The opinions of Brewer, Circuit Judge, and Thayer, District Judge, will be found reported in 34 Fed. Rep. 259. Mr. D. H. Chamberlain and Mr. Everett W. Pattison for appellants. The receivers of the Wabash, St. Louis and Pacific Railway Company, having taken possession of and operated the railroad of the Quincy, Missouri and Pacific Railroad Company, from May 27, 1884, to August 1, 1885, must be held to have adopted the lease under which said railroad was held at the time of their appointment, and to have made themselves and the property in their hands liable to the lessor company according to the terms of such lease. Thomas v. Pemberton, 7 Taunt. 206; Hanson v. Stevenson, 1 B. & Ald. 303; In re Oak Pits Colliery Co., 21 Ch. D. 322, 330, and cases there cited; In re Lundy Granite Co., L. R. 6 Ch. 462; In re South Kensington Cooperative Stores, 17 Ch. D. 161; In re Silkstone & Dodworth Coal & Iron Co., 17 Ch. D. 158; In re Brown, Bailey & Dixon, 18 Ch. D. 649; In re Bridgewater Engineering Co., 12 Ch. D. 181; Martin v. Black, 9 Paige, 641; S. C. 38 Am. Dec. 574; In re Brown, 3 Edwd. Ch. 384; Hoyt v. Stoddard, 2 Allen, 442; Boyce v. Bakewell, 37 Missouri, 492; Commonwealth v. Franklin Ins. Co., 115 Mass. 278; Woodruff v. Erie Railway Co., 93 N. Y. 609; Miltenberger v. Opinion of the Court. Logansport Railway, 106 U. S. 286; Vermont & Canada Railroad v. Vermont Central Railroad, 50 Vermont, 500; Langdon v. Vermont & Canada Railroad, 53 Vermont, 230; S. C. 54 Vermont, 593; Ex parte Faxon, 1 Lowell, 404; Fosdick v. Schall, 99 U. S. 235; Union Trust Co. v. Illinois Midland Railway, 117 U. S. 434; Ellis v. Boston, Hartford & Erie Railroad, 107 Mass. 1; In re New Jersey & New York Railway Co., 29 N. J. Eq. 67. There are no circumstances in this case which should except it from this general rule. Mr. Edward W. Sheldon filed a brief for appellants. Mr. James Thomson, by leave of court, filed a brief for appellants. Mr. Wells H. Blodgett and Mr. Thomas H. Hubbard for appellees. MR. CHIEF JUSTICE FULLER delivered the opinion of the court. When the receivers were appointed, the Wabash Company consisted of a system controlling some thirty-six hundred miles of road, made up by the consolidation and leasing of many different railroads, upon nearly every one of which there existed one or more mortgages. The company was insolvent, its preferential indebtedness amounted to nearly four and onehalf millions, its credit was gone, and many parts of the property were in a wretched condition. The bill was obviously framed upon the theory that an insolvent railroad corporation has a standing in a court of equity to surrender its property into the custody of the court, to be preserved and disposed of according to the rights of its various creditors, and, in the meantime, operated in the public interest. The relief sought was predicated upon the view that those rights were not changed by the application, and that the proceeding was in the interest of each and all of them as such interest might appear. The bill is characterized by one of the counsel as "without precedent." We are not called upon to inquire as Opinion of the Court. to how that may be, but we readily agree that the concession to a mortgagor company of the power through its own act to displace vested liens by unsecured claims is dangerous in the extreme. But no such concession was made here. On the contrary, from the beginning, the court, by repeated directions and orders, fully recognized the fact that none of the numerous defendants had consented that their rights, whatever they might be, should be subordinated to those of others to which they were superior, and that no defendant should be subjected to loss of priority because necessarily brought into association with others by the bill. In the order of appointment, the receivers were directed to pay out of the income that should come into their hands rental which had accrued or which might accrue upon all complainant's leased lines, but to keep accounts showing the source of income and revenue with reference to expenditure. Immediately, and within a month thereafter, the receivers called the attention of the court to the fact that the earnings of ten enumerated lines or divisions had not at any time since their acquisition been sufficient to pay their operating expenses, the cost of their maintenance and interest on the bonds and other obligations secured upon each of them, while certain others had; and by the confirmation of the master's report, which was made on the 28th of June, 1884, the court, adopting its recommendations, directed that the receivers should pay interest on the bonds or obligations secured on the several paying enumerated lines or divisions, from whatever balance of income might remain in their hands after meeting other obligations; and that an account should be kept of the earnings and incomes from, as well as the accounts of all the operating expenses, cost of maintenance and taxes upon, certain other enumerated lines or divisions, including that of the petitioner. This was followed by the declaration of the court that the earnings of the branches which earned their interest were not to be taken to pay interest on non-earning branches, but that the concerns which had not earned running expenses would be permitted to collapse. Then came the intervening petition of the appellant company for a transfer of the lease, Opinion of the Court. which petition was granted; but the order of court was not availed of or acted upon by petitioner. The order of April 16, 1885, reiterated the position taken by the court, and specifically pointed out that where there was no income, rental claims would not be paid. The petitioners, however, after taking possession of their road, asked the court to decree, not the allowance of their rental claims, and those for repairs, and taxes paid, as unsecured indebtedness, but a lien in their favor for those amounts superior and paramount to the mortgages on the property of the Wabash Company. They sought, in other words, to have these claims charged upon the corpus of the property in preference to subsisting contract liens. And they based this contention upon the proposition that the receivers had adopted the lease and made themselves, and the property in their hands, liable according to its terms. It is not asserted that these receivers became the assignees of the unexpired term of the leasehold estate with the right to dispose of it, but it is claimed that because they took possession of the railroad of the Quincy Company and held and operated it until August 1, 1885, they became liable to the extent of the rental up to that time. But the receivers were not statutory receivers, nor did they occupy identically the same position as assignees in bankruptcy or insolvency, and the like. They were ministerial officers appointed by the Court of Chancery to take possession of and preserve pendente lite the fund or property in. litigation; mere custodians, coming within the rule stated in Chicago Union Bank v. Kansas City Bank, 136 U. S. 223, 236, where this court said: “A receiver derives his authority from the act of the court appointing him, and not from the act of the parties at whose suggestion or by whose consent he is appointed; and the utmost effect of his appointment is to put the property from that time into his custody as an officer of the court, for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession in the property." As observed in relation to such a receiver, by the Supreme VOL. CXLV-7 Opinion of the Court. Court of Maryland, in Gaither v. Stockbridge, 67 Maryland, 222, 224, cited by counsel for appellee: "It is manifest that the scope of his duties and powers are very much more restricted than those of an assignee in bankruptcy or insolvency. In the case of an assignee in bankruptcy, the law casts upon such assignee the legal title to the unexpired term of the lease, and he thus becomes assignee of the term by operation of law, unless, from prudential considerations, he elects to reject the term as being without benefit to the creditors. But not so in the case of receivers, unless it be, as in New York, and some of the other States, where, by statute, a certain class of receivers are invested with the insolvent's estate, and with powers very similar to those vested in an assignee in bankruptcy. Booth v. Clark, 17 How. 331. The ordinary chancery receiver, such as we have in this case, is clothed with no estate in the property, but is a mere custodian of it for the court; and, by special authority, may become an officer of the court to effect a sale of the property, if that be deemed necessary for the benefit of the parties concerned. If the order of the court, under which the receiver acts, embraces the leasehold estate, it becomes his duty, of course, to take possession of it. But he does not, by taking such possession, become assignee of the term, in any proper sense of the word. He holds that, as he would hold any other personal property involved, for and as the hand of the court, and not as assignee of the term." But appellants insist that without regard to privity of estate or privity of contract, receivers in chancery are liable, not for a reasonable rental value during the occupancy of leased property committed to their charge by order of court, but for rental according to the covenants of the leases whenever there are unequivocal acts of use and control of such property; and that they thus adopt the leases and become bound by their terms so long as such use and control continue. It is said that this is settled doctrine, and that whether receivers take as statutory or common law or quasi or equitable assignees; whether the title is in them, or the estate, or the. whole estate, has vested in them, or whether they hold as |