
    WELCH & COMPANY v. CENTRAL SAN CRISTOBAL.
    San Juan,
    Equity,
    No. 940.
    As to Salt! of Receivership Property.
    Receivership — Sale of Property.
    1. A court of equity having possession of property by its receiver may, pending litigation, sell the property in suit when such course is necessary to preserve the interest of all parties, whether or not rights of mortgagees or other creditors have been determined. These questions may be reserved and claims settled out of proceeds.
    Receiver’s Sale — Whole Property.
    2. The whole business involved in a receivership should be sold either as an entirety or in lots all at the same time.
    Sale — Bondholders’ Bid.
    3. At a sale under a mortgage the bondholders may use their bonds as part of their bid, providing for expenses and preferred claims in cash, and any receivership sale ordered pending litigation should, if possible, have similar provision.
    Receivership — Preservation.
    4. A court cannot permit trust property under its administration to perish while determining who are the beneficiaries entitled thereto. It will take care of the property by some means.
    Opinion filed November 16, 1914.
    
      Mr. H. G. Molina for complainant.
    
      Mr. •/. II. Brown for defendant.
   HamiltoN, Judge,

delivered tbe following opinion:

Tbe motion for sale sets up that tbe condition of tbe property is sucb that it cannot be operated by tbe receiver to advantage, and that it is apt to deteriorate in bis bands if unused. Tbe trustee of tbe mortgage bondholders opposes tbe receivership sale, and alleges that tbe foreclosure suit now pending will be pressed and bring about a sale which will be more to the' advantage of all concerned.

1. “A court of equity appointing a receiver to take possession of property, pending a litigation concerning tbe rights of tbe parties thereto, is vested with tbe power of selling the-property in tbe receiver’s bands, whenever sucb course becomes-necessary to preserve tbe interests of all parties.” High, Receivers, § 192. This principle has been applied to tbe case of' a steamboat, where it could not be employed profitably, and when large disbursements would be necessary to fit it out. Crane v. Ford, 1 Hopk. Ch. 114; McLane v. Placerville & S. Valley R. Co. 66 Cal. 630, 6 Pac. 748. Tbe order is one-resting in tbe sound judicial discretion of tbe court. 34 Cyc. “Receivers,” p. 310. This discretion may be exercised even though tbe rights of mortgagees, at tbe time sucb sale was. ordered, or other creditors, have not been determined. Sucb questions may be reserved and the- claims settled out of the-proceeds of tbe sale. First Nat. Bank v. Shedd, 121 U. S. 74, 30 L. ed. 877, 7 Sup. Ct. Rep. 807.

2. A sale of tbe property should, if possible, be so regulated' as to cover tbe central as a whole. It is alleged that the-mortgage does not cover all tbe property, and that tbe general creditors are entitled at least to so much as is' not described in tbe mortgage, while the central, to be operated to advantage,, must be handled and sold as an entirety, whether it all be under-the mortgage or not. This principle should be observed. It is. sometimes effected by selling the property as a whole, and., sometimes by selling it all at the same time in lots representing the respective liens.

3. If a sale is ordered now, however, it would place the-bondholders at a disadvantage. If sold under foreclosure the-bondholders would have a right to pay their bid in bonds, except as to expenses and preferred claims, which the court might order-paid in cash. At present, however, there has been no proof of the mortgage or the bonds, and it is difficult to see how the-court could frame an order which would permit them to be-used in bidding at a receivership sale. This is the practical difficulty that will have to be covered in some way in case of' sale, and makes the court disinclined to order a sale at this time.

4. On the other hand, there is no question that the court cannot permit trust property, whether it be a central in a receiver’s, hands or any other property under its administration, to perish-while it is determining who are the beneficiaries.

An order will be entered, therefore, directing the receiver'to-inquire and report within a week what he can do in the way of borrowing sufficient funds to operate the mill for the next grinding season, consulting not only banks, but the mortgage bondholders and complainant Welch. Meantime, no order of sale will be granted, and what will be done if there is no possibility of operating the mill will be determined when the receiver’s report comes in.

The motion for sale is therefore held under submission until! the coming in of this report.  