LEWIS, Circuit Judge,
after stating the case as above, delivered the opipion of the Court.
It will be observed that the proceedings brought against the Dold Company by the receiver were not for the purpose of obtaining-an order relieving him from performance of the lease contract during receivership, as a burden on the estate in administration detrimental to the rights of others having superior claims to the assets in his hands and which might be jeopardized if he were required to, perform. Railway Co. v. Lusk, 224 Fed. 704, 140 C. C. A. 244; Peabody Coal Co. v. Nixon, 226 Fed. 20, 140 C. C. A. 446. What the receiver sought and what the court granted was a striking down of the contract, with its obligations, duties, rights and burdens, as though it had never been executed. It is further apparent from .the facts in the case that the Skinner Packing Company was, at the time the receiver was appointed and at the time of the' hearing, amply solvent. It had assets many times more in value than all of its indebtedness. The procedure instituted both by the receiver and stockholders cannot therefore be said to have been brought in behalf of or for the protection of creditors, nor can the order and decree of the court be regarded in any sense as having been made for that purpose. The largest creditor was the Dold Packing Company for money expended by it in additions and changes made in the plant under the terms of the contract; and while the court, on cancelling the contract, held that the Dold Company was not entitled to repayment of those sums in accordance with the contract, it did decree that the Skinner Packing Company should be held indebted to it for their reasonable value.
[1-3] It is obvious that the sole purpose of the proceedings brought by both receiver and stockholders was to get rid of the lease contract for the supposed benefit of the Skinner Packing Company and its stockholders, and the decree can have no other purpose and effect. The distinction between the right of a receiver to elect not to bind the receivership to the performance of existing executory contracts and thus burden assets in his hands, to the detriment of those having superior rights thereto, and his right to maintain an action to cancel and annul such a [323] contract, is broad and plain. They rest on entirely different principles. Under the broad powers of his appointment, we assume that he had a right to maintain his action, but his rights in that respect were no greater or different than those of the Skinner Packing Company. In making his case he stood in the shoes of the Skinner Company. He brought his petition in behalf of that company, and he notified the D'old Company by letter in July, 1921, that he would not be bound by the lease contract and that he would ask the court to direct him to take the necessary action to protect the interests of the Skinner Packing Company and its stockholders. His appointment did not invest him with the rights oí the stockholders as such and any cause of action which they might have had independent of the corporation itself could not be instituted and carried on by him. Conversely, stockholders had no right to institute, and maintain causes of action which belonged to the Skinner Packing Company. The order of appointment of Neville invested him with the right to maintain such actions. He charged in his petition against the Dold Company filed in the receivership cause on November 5, 1921, that there had been fraudulent conduct and false representations on the part of the Dold Company and by others in its behalf in procuring the execution of the lease contract of October 26, 1920, that the contract was unjust, inequitable and improvident, that the Dold Company made changes and alterations in the plant without giving the Skinner Company notice thereof and opportunity to pass on the necessity therefor, that it had injured and damaged the plant, that it had kept its books and records in such manner as to make it difficult to check, the business conducted by it, that it had shown favoritism to the Jacob Dold Packing Company, that up to October 1, 1921, there had been an operating loss of approximately $275,000, one-half of which and the costs of improvements made by the Dokl Company of approximately $143,000 were charged against the Skinner Company, that the credit of the Skinner Company had been destroyed and unless the contract were abrogated the Dold Company would absorb the entire property of the Skinner Company, and that the contract was entered into and possession of the plant taken by the Dold Company without complying with the provisions of the laws of Maine relative to notice to stockholders.
[4] The last subject-matter complained of by the receiver was not, as we will attempt to show, a subject of which he could make complaint, because the Skinner Company could not have done so. The charge of fraudulent conduct and false representations is out of the case, because there is not a particle of evidence that tends in the remotest degree to sustain that charge, and the Master found it unsustained. The record shows that the management of the Skinner Packing Company was wholly inexperienced in the industry. After the plant was constructed, a few weeks’ trial demonstrated to them that they could not operate it. It was shut down, a large part of the employees and the organization were retained and kept going at heavy expense for several months in an effort to dispose of the product on hand, and then the president of the company sought to find some one who understood the business and would take over the plant. After consultation with packers in other cities, he went to Buffalo and sub[324] mitted a proposition to Jacob Dold Packing Company. He was not willing that the plant should be leased outright, he insisted on a profit-sharing agreement and after lengthy negotiations and full consideration the executed contract was agreed upon. It was submitted to the Board of Directors of the Skinner Packing Company and approved by them, and at an adjourned annual meeting of stockholders all stock represented, consisting of more than 75% of that entitled to vote, approved the contract. The charges of fraud were utterly groundless and there was a total failure of proof. But the Master found that the lease contract was inequitable and improvident, so far as the Skinner Packing Company was concerned, and the court approved the finding. As we view the case, there is no competent evidence in the record to sustain that finding. From the report it appears to us that the finding was not based on testimony but is rather the personal opinion and conclusion of the Master reached by him from the terms of the contract and from the further fact, which had some support in the testimony, that the receiver could not re-finance the Skinner Company while the Dold Company remained in possession of the plant under the contract. As to the first, he points out that the Skinner Company turned over to the Dold Company property of the approximate value of $3,325,000, that the Dold Company was to take out each year, if-earned, $60,000 as interest on its invested capital, that the Jacob Dold Company was to receive $15,000 á year for executive management, that the Skinner Packing Company was to pay insurance, taxes, and keep the property in repair, and receive half of the net profits and hear half of the net losses ; and as to the second he says that the receiver has made repeated efforts to finance the Skinner Company but has been unsuccessful with the contract of October 26, 1920, in existence and that as long as that contract continues the company has no credit and the receiver cannot' borrow money; that if the lease contract is gotten rid of, the receiver can finance the Skinner Company without difficulty. The Jacob Dold Packing Company is one of the oldest establishments of the kind in the United States. When its subsidiary, the Dold Company, took possession of the Omaha plant and began operation, the Jacob Dold Company extended to it its facilities for distributing and marketing its products. Its widely and well known brands, which gave assurance of quality, were used by the Dold Company and put upon the products of the Omaha plant so they would have a more ready access to the markets. The Jacob D'old Company turned over to the Dold Company a storage plant at Memphis in which those products might be received and dispensed to the Southern trade. It sent to the Omaha plant, without charge to the Dold Company, experienced men in its employ, heads of departments, to organize and instruct the working force in the Omaha plant in all of its . departments, so that plant could be economically conducted. They spent weeks, and some of them months, there for that purpose, without cost or charge to the Dold Company except as it was covered in the charge of $15,000 per annum. When the Dold Company needed additional funds, they were obtained through the credit and assistance of the Jacob Dold Company to an amount at one time of $1,100,000 in addition to the invested capital and surplus of the Dold Company.
[325] None of these things appear to have been considered or to have made any impression on the Master and the court in this finding. These services were of great value and indispensable. They were provided for under the contract. Neither did they consider, so far as we can find, that Skinner Packing Company was without standing or reputation in the industry and had no facilities for marketing its product and could not operate its plant, nor to the uncontradicted testimony of Jacob Dold that during his fifty years’ experience in the meat packing business the year 1920-21 was the most disastrous to packers, and the percentage of loss on the amount of business transacted during the year was less at the Omaha plant than at the Jacob Dold Company’s plant at Buffalo. The receiver testified that, in his opinion, the contract was inequitable and improvident, but he frankly stated that he knew nothing whatever about the packing business, — that his business had been that of real estate and banking and trading with farmers in Western Nebraska: He further testified that he could not re-finance the Skinner Company unless the contract was annulled, and that the stockholders could not hope to receive any return on their investment unless that was done, that the Skinner Company could not operate the plant and that it would not help him materially if the plant had to remain idle. In the suit brought by stockholders against the Dold Packing Company and the Skinner Packing Company, the receiver filed an answer for the Skinner Company, which he verified, on March 10, 1922, and in which he alleged that the contract between the Dold Company and the Skinner Company was authorized by the Board of Directors of the latter and by its common stockholders who were present at the 1920 adjourned annual meeting, that notice of said annual meeting was sent to all common stockholders, that the notice did not contain a reference to the contract, and that all acts done-and performed by the Board of Directors and common stockholders (of the Skinner Company) relating to the execution of said lease were done in good faith and with a belief that all said acts were legal and proper and for the best interests of that company and its stockholders. We have no doubt that the Dold Company also acted in entire good faith in executing the contract and in all of its efforts in attempting to carry it out. There is no proof that its terms were unfair, unreasonable or unjust to either of the parties or that there was accident, mistake, imposition, overreaching or fraud in its execution.
[5] It is the general rule that a contract will not be set aside for improvidence unless the improvidence or inadequacy of consideration is so great as to furnish, of itself, convincing evidence of fraud. 9 C. J. 1174. We must hold that the finding of the Master, approved by the court, that the lease contract was inequitable and improvident to the Skinner Company, is without support. The other matters complained of in the receiver’s petition consist of alleged breaches of the contract by the Dold Company which, if proved, would afford ground for recovery of damages. But they are not true. The contract provided that the Skinner Company, promptly following its execution, should fully complete its plant and equipment for the proper and economical conduct of the packing business, so that the plant should be in readiness [326] for use and operation as a packing plant, and in default of so doing the Dold Company might complete the machinery, equipment and facilities of the plant, and the cost and expense to tire Dold Company should be immediately paid to it by the Skinner Company. The Master found:
“Additions, betterments and changes made in the plant by the Dold Company were made, without securing the prior consent of or any notice to the Skinner Packing Company, and since the appointment of the receiver he has received no notice of any character from the Dold Packing Company regarding any proposed alterations, changes, etc.”
As a matter of fact, the record shows that immediately on the execution of the contract the Dold Company brought an experienced naan from Chicago, who made a complete inspection of the plant in company with the representatives of the Dold Company and at tire request of the president of the Skinner Company to ascertain what changes and improvements should be made, and early in November, 1920, the Dold •Company submitted to the president of the Skinner Company a written •statement showing in detail the changes and improvements in the plant necessary for its proper and economical conduct. The list divided the proposed improvements and changes into three classes: those immediately needed, those needed in the near future, and those which might be installed later on, and, in a letter from the Dold Company to the Skinner Company accompanying the list, it urged immediate action and stated that the Dol'd Company expected to start killing in a very few days. The Skinner Company received the letter and list. Again, on February 5, ' 1921, a list of needed changes and improvements was submitted to the Skinner Packing Company. It failed to make any of them and the Dold Company put them in at its expense and charged the cost to the Skinner Company, all of which remains unpaid. After the receiver was appointed, the Dold Company submitted to him its accounts for improvements that it. had made.
[8] Complaint is further made, and the Master found, that the Dold Company did not notify the receiver, after his appointment, of any further improvements or changes that it desired to have made in the plant. Some improvements may have been made during the receivership, but it does not appear what they were. Neither does it appear that the receiver ever took the trouble to make inquiry on that subject. He notified the Dold Company in July, 1921, that he would not carry out the contract. It would appear to have been an idle performance to have asked him to make any improvements after that date. There was uncontradicted evidence on the part of the Dold Company that all improvements that were made in the plant by it were necessary to the proper and economical operation of’the plant. The Master also found that the Dold Company had broken the contract because it did not notify the Skinner Company of the additions and improvements that it had made in the separate buildings constituting the plant and the amount expended for each; he said that the lease did not contain a reqúirement that such notices should be given, but that, inasmuch as it was necessary for the Skinner Company to know those facts in order to protect itself under the 80% coinsurance clause of its policies, in event of loss by fire, which has not occurred, he would construe the contract as requiring the notices to be [327] given. It is not pretended that the Skinner Company, or the receiver, ever made any inquiry about the improvements added in the separate buildings, nor that they could not have easily ascertained those facts if they had made inquiry. It is further complained, and the Master sustained the complaint by his finding, that the Dold Company had broken the contract because it had permitted the Jacob Dold Company to turn over to it for its use a storage plant at Memphis where the products of the Omaha plant could be held and from there shipped to Southern markets, that the expense of maintaining that plant was charged to the Dold Company and a part of the loss sustained during the year was charged to that plant. He found that the Memphis branch had theretofore been maintained by the Jacob Dold Company at a loss. A branch was also opened in Chicago for distribution there of the Omaha products and a part of the total losses for the year amounting, as the Master found, to $362,000 included the losses allocated to those two branches. That al'so was found to be a breach of the contract and relied on as a ground for its cancellation. These charges, if all true, were at most breaches of the contract in minor respects, the proper remedy for which is in damages; and they afford no basis for rescission. Cliitty on Contracts (11th Éd.) vol. 2, pp. 1091, 1092, says:
“But. it is a clearly recognized principle, that if there be only partial failure of performance by one party to a contract, for which there may be compensation in damages, the contract is not put an end to. And the right to abandon the contract vests only in the party who has been guilty of no default; for a man cannot take advantage of his own wrong in order to put an end to a contract into which he has entered. So, such right, when it does exist, must be exercised within a reasonable time. Nor can a contract, in general, be rescinded in toto by one of the parties where both of them cannot be placed in the identical situation which they occupied when the contract was made.”
Bishop on Contracts (Enlarged Ed.) § 828, after announcing that there cannot be rescission if there is only partial failure of performance by one party to a contract for which there may be compensation in damages, says:
“And, in general terms, the doctrine is, that the breach, to justify a re-eisfdon, must be of a dependent covenant or willful or in a substantial part comprehending the root of the whole.”
Eor a list of cases sustaining this fundamental principle, see 9 C. J. 1181.
[7] There is another principle that should have been applied in this case. As a condition to the rescission and cancellation of a contract, the complaining party must make restitution of the benefits which he has received under the contract. The Dold Company made extensive and valuable improvements to the Omaha plant. The parties recognized that they were needed. They were made in accordance with the provisions of the contract. The receiver did not tender to that company the amounts which it had expended in making those improvements, nor does the decree provide that he shall make payment therefor as a condition to its cancellation. It puts the Dold Company to the necessity and expense of having a judicial ascertainment of the reasonable value of those improvements. It does not provide that the cost and expenses thereof to the Dold Company shall be paid to it. 9 C. J. 1207 ; 24 A. [328] & E. Ency. of Law (2d Ed.) 645. On the merits of the case made by the receiver, we think the decree wholly unsustained.
[0] Another ground on which the receiver asked for cancellation, and sustained by the Master, was the failure of the corporation to give notice to stockholders that the lease contract would be considered at the meeting at which it was ratified. A statute of Maine, where the Skinner Packing Company was incorporated, reads thus:
“No corporation shall sell lease, consolidate or in any manner part with its franchises or its entire property or any of its property, corporate rights or privileges essential to the conduct of its corporate business and purposes otherwise than in the ordinary and usual course of its business except with the consent of its stockholders at an annual or special meeting, the call for which shall give notice of the proposed sale or consolidation. All such sales, leases and consolidations shall b.e subject to the provisions of this and the eleven following sections and to the prior liens of stockholders as therein defined.”
The eleven following sections of the Maine statute demonstrate that their purpose is solely for the protection of stockholders. They provide a remedy and mode of procedure to each dissenting stockholder by which the value of his stock may be judicially ascertained, which must be paid to him by the corporation, and if not .paid each dissenting stockholder is given a lien on the corporate assets for the amount so adjudged in his favor. A prerequisite to the right and remedy so given is that he shall have voted in the negative and shall file with the president, clerk or treasurer of the corporation, within one month from the day of such vote, his dissent. The corporation is then given one month after the dissents are filed to enter its petition with the Supreme Judicial Court, sitting in equity, setting forth the facts and names and residences of all dissenting stockholders whose dissents have been filed, making them parties, and praying that the court determine the value Of the share so dissenting. On failure of the corporation to file the petition, any dissenting stockholder may, within one month thereafter, enter such petition for the same purpose. After the value of the dissenting shares has been determined, the corporation is given an opportunity to deposit the amount, whereupon said dissenting shares become the property of the corporation. The statute provides that any stockholder who fails to file his dissent shall be deemed to have assented. This statute does not give, and does not pretend to give, to the corporation any rights whatever. They are given solely for the benefit of stockholders. Westerlund v. Black Bear Mining Co., 203 Fed. 599, 121 C. C. A. 627. It seems too clear for argument that the corporation could not be heard to maintain a suit to cancel this contract because the specific notice required by the statute was not given, nor can the receiver, who sues in its behalf. Moreover, in the contract between the Skinner Company and the Dold Company we find this:
“The Skinner Company shall cause this agreement to be submitted to and ratified by its Board of Directors and its voting stockholders.”
To permit it, or the receiver in its stead, to set up the regulatory requirements of the statute on corporate procedure is but to concede to it the right to take advantage of its own neglect of duty in [329] failing to comply with one of its obligations under the contract._ The 'Dold Company might he entitled to be heard in a court of equity on that complaint, but not the Skinner Company and its receiver. No man can take advantage of his own wrong. The Maine statute did not declare contracts absolutely void, or even voidable, when made in non-compliance with its regulatory requirements. The receiver’s petition should have been dismissed.
[9] In the suit brought by stockholders, the principal fact relied on by them for cancellation of the contract was the failure of the Skinner Packing Company to embody in the notice calling the annual meet-' ingof common stockholders, at an adjourned session of which the lease contract was ratified, a specific statement that the lease contract would be submitted at that meeting for ratification. Of the five stockholders who brought that suit, only one of them owned common stock and he held only eight shares; the other four could not vote and could not have availed themselves of the provisions of the Maine statute. They alleged that they brought the suit in their own behalf and in behalf of all other citizens of Nebraska similarly situated. The Dold Company’s offer to show that their suit was collusive, that they had been indemnified against all costs and expenses in bringing and maintaining it, was denied. No other stockholder joined them in that suit or came forward to aid them in its prosecution, but stockholders owning 466 shares of common and 312 shares of preferred intervened and protested, against the proceedings. One of the five complaining stockholders was a creditor holding bonds of the Skinner Packing Company secured by mortgage on its property. Besides that, the Skinner Company was amply solvent. The value of its property was many times in excess of its liabilities. The Master found that it owed about $250,000 when the receiver was appointed, and at the time of the hearing about $350,-000. The receiver testified that some of its indebtedness was not found out until after his appointment. A part of the increase was cost and expenses in receivership. It cannot be believed that there was any cause for a suit by him as bondholder or that any lawyer who had a proper regard for his rights as such would have advised him to sue on that account. However that may be, that fact gave him no status as a complainant under the Maine statute on which he and his coplaintiffs relied. As already pointed out, that statute was clearly for the protection of stockholders who are entitled to vote, and the remedy which it provides is extended to them only. It regulates corporate procedure in a particular respect, but it imposes no penalty for noncompliance. Of course, a stockholder entitled to vote cannot bring himself within the terms of the statute if he does not vote or is not given an opportunity, contemplated by the required statutory notice, to vote.
We will consider the stockholders’ complaint on the assumption it makes that both common and preferred stockholders can avoid the contract if the statutory notice is not given. They brought their suit fourteen months after the Dold Company took possession of the plant and began operation. During those months it did a large business, in which it had invested all of its capital and surplus and had borrowed [330] and put into the business other large sums. At the time the suit was brought it had in process of curing at the plant a large amount of its products. It had expended time and labor in building up a trade for those products and for its future business. These stockholders asked the court to cancel the contract between it and the Skinner Company because of the failure to give the statutory notice, to require the Dold Company to surrender possession to the receiver and to pay him rental during the occupancy. The consequences to the Dold Company of such an order and decree cannot be doubted. It would necessarily result in heavy losses, if not bankruptcy. If they had 'brought such a suit immediately after the contract was executed and had succeeded therein, losses to the Dold Company would have been comparatively slight. Immediately after the execution of the contract in October, 1920, the Skinner Company, in a full page publication in one of the leading and widely distributed newspapers issued at Omaha, gave notice that it had turned its packing plant over to the Dold Company for a term of years on a profit-sharing lease contract. It also sent at once through the mail a notice to all stockholders, both common and preferred, advis•ing them that it had made the lease contract. None of these complaining stockholders denied receiving the notice sent to them and reading the notice published in thé newspaper. Some of them admitted it, but, as an excuse for inaction, said they had never read the lease contract. The Dold Company had a right to rely upon the written agreement that the Skinner Company would cause the contract to be submitted to and ratified by its voting stockholders. If the complaining stockholders were not fully informed by the open and notorious possession of the plant, by the notice published in the newspaper and by the notices sent them through the mails, they were put upon further inquiry, but they chose to sit by silently for fourteen months waiting for results in operation under the contract. The Supreme Court, in Kirk v. Hamilton, 102 U. S. 68, 26 D. Ed. 79, quotes approvingly from the opinion of Chancellor Kent in Wendell v. Van Rensselaer, 1 Johns. Ch. (N. Y.) 344, this:
“There is no principle better established, in this court, nor one founded on more solid considerations of equity and public utility, than that which declares, that if one man, knowingly, though he does it passively, by looking on, suffers another to purchase and expend money on land under an erroneous opinion of title without making known his own claim, shall not afterwards be permitted to exercise his legal right against such person. It would be an act of fraud and injustice, and his conscience is bound by this equitable estoppel.”
On the plainest principles, by their laches, they were estopped to bring this suit, and should be held to have acquiesced in the lease contract, Westerlund v. Mining Co., 203 Fed. 599, 121 C. C. A. 627; Elder v. Mining Co. (C. C. A.) 280 Fed. 569; Watt’s Appeal, 78 Pa. 370; Hill v. Railroad Co., 143 N. C. 539, 55 S. E. 854, 860, 9 L. R. A. (N. S.) 417; Rabe v. Dunlap, 51 N. J. Eq. 40, 25 Atl. 959; Bishop v. Kent & Stanley Co., 20 R. I. 680, 41 Atl. 255; Sturm v. Wiess (C. C. A.) 273 Fed. 457; 2 Pomeroy’s Eq. Jurisp. §§ 816-820, 965; 16 Cyc. 158, 162.
[331] [10] The complaining stockholders also set up and relied upon a Nebraska statute which provides that before a foreign corporation shaE be authorized to engage in any kind of business in that state it shall make and file a certificate with the Secretary of State and with the register of deeds of the county in which its principal place of business in the state shall be located, designating therein its principal place of business and appointing an agent in that state. They claim that the Dold Company did not comply with that statute, and for that reason the contract should be cancelled. That company did not take possession of the Omaha plant until November 1, 1920,, and began a few days; later to operate it. It filed the certificate required by the Nebraska statute on October 29, and the insistence of the complaining stockholders is based on the fact that three days before the certificate was filed the contract between the Dold Company and the Skinner Company was executed, and that the execution of that contract was the engaging in business by the Dold Company in the state of Nebraska. The contention calls for a strained and unreasonable construction. The business of the Dold Company in which it expected to engage in Nebraska was to operate the plant, provided the contract should be finally executed. It could not know until it was executed that it would engage-in business in the state of Nebraska. The statute did not declare all acts of the corporation done in the state prior to filing the certificate void. It prohibited a foreign corporation from engaging in business, until it filed the certificate. There was also a claim that the Dold Company neglected to file its articles of incorporation with the Secretary of State in Nebraska. We think the statutes of that state contain no-such requirement. Counsel for the Dold Company testified that he sent the articles of incorporation to Lincoln and had the question referred to the Secretary of State as to whether they should be filed with him, and that the Secretary advised that it was not necessary to do so.
[11] We have considered the case, both as to the receiver and the complaining stockholders, as though.the procedure against the Dold Company was proper. We have no doubt that it was improper. The Dold Company was never made a party to the receivership proceedings, and not being a party to those proceedings it had a right to have the controversies raised with it by the receiver and stockholders litigated in plenary actions, separate and apart from the proceedings in receivership. It was in possession of the plant under claim of right thereto, when the receiver was appointed. In Davis v. Gray, 16 Wall. 203, 21 L. Ed. 447, it is said:
“Where property, in the possession of a third person, is claimed by the receiver, the complainant must make such person a party by amending the Mil, or the receiver must proceed against him by suit in the ordinary way.”
For other cases announcing the same principle, see Wheaton v. Daily Telegraph Co., 124 Fed. 61, 59 C. C. A. 427; Mississippi Valley Trust Co. v. Railway Steel Spring Co., 258 Fed. 346, 354, 169 C. C. A. 362; Fidelity & Deposit Co. v. Johnson (D. C.) 275 Fed. 112; Horn.v. Railroad Co. (C. C.) 151 Fed. 626.
[332] [12, 13) Furthermore, the writ of assistance, awarded by the decree in the receivership cause, could not issue against one who was not a party on the record to that proceeding. Howard v. Ry. Co., 101 U. S. 837, 848, 25 L. Ed. 1081; Terrell v. Allison, 21 Wall. 289, 22 L. Ed. 634; Thompson v. Smith, 1 Dill. 458, Fed. Cas. No. 13,977. The complaining stockholders brought an independent suit. It was entered on the court records as such, and the court, over the objection of the Dold Company, consolidated it with the petition Of the receiver filed in the receivership cause. The receiver could not prosecute the cause of 'action set up by the complaining stockholders, he had no such cause of action; and the complaining stockholders could not prosecute the cause of action set up by the receiver, they had no such cause of action, as we have attempted to point out. Nevertheless, the court, over objection, made the consolidation, consolidating the stockholders’ suit with the receiver’s petition filed in the receivership cause, No. 270 — In Equity, to which the Dold Packing Company was at no time made a party, referred the consolidated cause to the Master and entered a decree in the consolidated cause. Exceptions were saved to all of these orders and action of the court. They constitute reversible error.
We think the position taken by the intervening stockholders was the right one. They insisted that when the receiver, within two months after his appointment, succeeded in removing the president of the company and his associates on the Board of Directors who had been utilizing the company for their personal advantage and benefit, the purposes for which the receivership was instituted had been accomplished, that there was nothing else that could be made the subject of judicial determination in the receivership cause; and that the receivership should be wound up and the company and its affairs restored to its stockholders. In Pusey & Jones Co. v. Hanssen, 261 U. S. 491, 43 Sup. Ct. 454, 67 L. Ed. 763, it is said:
“Whether the debtor be an individual or a corporation, the appointment of a receiver is merely an ancillary and incidental remedy. The receivership is not final relief. The appointment determines no substantive right; nor is it a step in the determination of -such a right. It is a means of preserving property which may ultimately be applied toward the satisfaction of substantive rights.”
See also Brictson Mfg. Co. v. Close (C. C. A.) 280 Fed. 297; Myers v. Occidental Oil Corporation (D. C.) 288 Fed. 997.
[14] Property in receivership is in the custody of the court, and while the court may approve a reorganization of the business affairs of the property which it holds in receivership, made and agreed to by those who are interested in it, we do not understand that it is the duty or province of a court to take into its possession and hold the business affairs of others for the primary purpose of reorganizing that business. This record discloses that to be the remaining purpose in the receivership cause, and, however well the receiver might discharge the assumed duty, we think it properly belongs to the stockholders of the company, whose judgment ought to dictate what shall be done in that regard.
[333] The decree is reversed, with directions to dismiss the petition of the receiver and the stockholder who was permitted to join with him, and the complaint of the other five stockholders, and to adjudge all of the costs in the proceedings against them.