The Queen v. Coopers & Lybrand Ltd., 80 DTC 6281, [1980] CTC 367 (FCA)

Kelly, DJ:—The issue in this action is whether the respondent is liable for the amounts required to be deducted, pursuant to section 153 of the Income Tax Act, for income tax, from the wages and salaries of employees of Venus Electric Limited (Venus) for the pay period ended September 24,1976 (the final pay period). The trial judge negatived such liability whereupon the Crown appealed to this Court.

There is no significant disagreement concerning the facts which I now set out despite vastly varying contentions of the parties as to their respective positions at law.

Venus, a company incorporated under the laws of Ontario, was engaged in the business of assembling and selling electric appliances, employing some 850 persons. It carried on business in four locations, two in the Province of New Brunswick and two in the Province of Ontario.

The principal banker of Venus was the Mercantile Bank of Canada (The Bank) to which Venus was heavily indebted; as security for the indebtedness Venus had:

(1) given the Bank security under Section 88 of the Bank Act;

(2) executed a debenture in favour of the Bank by which it created

(a) a fixed charge on its real property and;

(b) a floating charge on all its other assets including its undertaking, such floating charge to become crystallized into a fixed charge on the occurrence of any one of certain events in the debenture specified; paragraphs 4.03 and 4.04 of the debenture as set out in the appendix hereto describe the rights and remedies of the Bank if and when any event of default triggered the fixation of the floating charge.

The Province of New Brunswick was financially interested in Venus, having guaranteed its indebtedness for sums other than the indebtedness to the Bank. During the summer of 1976 the financial condition of Venus was causing concern and Coopers & Lybrand, a firm of chartered accountants, was retained by the Province to look into the situation of Venus. Its findings were not reassuring and meetings were held at which were present representatives of the Bank and Coopers & Lybrand. From then on Coopers & Lybrand kept closely in touch with the progress of Venus and at or shortly before September 24, 1976 recommended that a receiver should be appointed.

On September 24, 1976 the bank delivered to the respondent, a company performing services as receiver and an affiliate of the accounting firm of Coopers & Lybrand, a letter of appointment in the following terms:

“September 24, 1976’’

Coopers & Lybrand Limited,

145 King Street West,

Toronto, Ontario.

Dear Sirs:

Venus Electric Limited

We hereby appoint you as Receiver and Manager of Venus Electric Limited under and pursuant to the $10,000,000 debenture dated March 26, 1976 issued by Venus Electric Limited to The Mercantile Bank of Canada.

We also appoint you as our Agent to collect all receivables of Venus Electric Limited assigned to us pursuant to a general assignment of debts from the above Company registered in New Brunswick on February 27, 1976, and in Ontario on March 11, 1976 and to realize on our security held by us pursuant to Section 88 of The Bank Act given to us by the above company.

THE MERCANTILE BANK OF CANADA

“James McCall ion”

James McCallion

Assistant Manager

Saint John Branch

In anticipation of this appointment the respondent had one of its employees at each of the four locations at which Venus carried on business and at 1:00 am on Saturday September 25, the respondent, through its employees, went into possession of all the property and assets of Venus.

On Monday, September 27 or as soon as each employee came in contact with the respondent’s representative a letter in the following terms was delivered to him or her.

VENUS ELECTRIC LIMITED

September 25, 1976

To the employees,

We have been appointed Receiver and Manager of Venus Electric Limited and Agent for the Mercantile Bank of Canada. As a result, we are now responsible for the administration of the Company’s affairs.

It is our present intention to continue the company’s operations.

Our staff will be involved in many aspects of the business and we will appreciate your cooperation and continuing support.

COOPERS & LYBRAND LIMITED Receiver and Manager

John R Hadfield.

During the week-end four employees of the respondent, met physically to formulate plans and recorded minutes of their meeting which read in part as follows:

Decision No 1

A decision was reached by those present at the meeting, that since it was in the company’s interest to ship product, and to do so requires the services of present employees, we will make a payment to each employee by the amount of which they (the employee) are ‘‘out of pocket” with respect to work done for the company as a result of the company’s failure and the company could not pay.

Collectively, the persons who benefitted by the procedure outlined in resolution No 1 will be referred to as the employees.

At this stage it will be helpful to outline the procedure which Venus had adopted with respect to paying its employees. Venus had contracted with the Bank of Nova Scotia for the use of the sophisticated facilities the Bank had developed for handling payrolls.

For each pay period, Venus furnished the Bank with the number of hours worked by each employee; using, inter alia, information it already had with respect to the rates of pay applicable to and under what headings deductions were to be made from each employee, the Bank calculated for each employee, the amount earned, the amount of each deduction for income tax, Canada Pension Plan, unemployment insurance or other authorized deductions and the net amount payable, prepared a cheque in favour of each employee and prepared a tabulation of the amounts earned, the deductions and amounts payable for each point of payment. Accompanying his or her cheque each employee received a slip on which appeared the appropriate amounts with respect to the pay period and a cumulative total for the calendar year of earnings and deductions.

In the case of the Atholville and Saint John payrolls, the local branch of the Bank of Nova Scotia debited the Mercantile Bank, in the case of other payrolls, Venus issued its cheques drawn on the Mercantile Bank payable to the Bank of Nova Scotia, for the aggregate of the earnings.

With funds which were apparently provided to it by the Bank, the paying branches of the Bank of Nova Scotia honoured the salary cheques which had been issued for the final pay period. The payments to each employee were equal to his or her “take home pay”, ie, his or her gross earnings for the final pay period, less authorized deductions, one of which deductions was on account of Income Tax.

With regard to the Toronto payrolls, cheques were drawn in favour of the Bank of Nova Scotia on the printed form of the cheque previously in use by Venus on which appeared, in the space in which a signature usually appears, the words:

Venus Electric Limited

COOPERS & LYBRAND LIMITED

Receiver and Manager

John R Hadfield

The debit notes issued by the Bank of Nova Scotia with respect to the New Brunswick payrolls were in due course honoured. Although, in pursuance of this procedure, the money did not pass through the hands of the respondent there can be no doubt that the payments by the Bank of Nova Scotia to the employees were clerical acts by which the respondent caused the moneys to be paid to the employees.

In February 1977 the respondent prepared and filed T-4 and T-4 Supplementary Income Tax forms covering the period January 1, 1976 to September 24, 1976 inclusive. As required, to each employee to whom wages were paid during that period there was sent a copy of the T-4 Supplementary slip relating to him or her. The exhibits before this Court did not include the totality of the Bank of Nova Scotia payroll calculations and the T-4 Supplementary forms but selected samples of them were filed as exhibit A-10 and exhibit A-16 respectively. The names of seven employees ap- peared on both exhibits. A comparison of the figures appearing in those exhibits relative to those seven employees showed that the figures for the aggregate deductions for income tax from January 1, to September 24, on each of the exhibits were identical and that the figures for gross earnings for the same period on each of the exhibits were either identical or substantially the same. The conclusion I arrive at from this similarity is that the aggregate earnings shown on the T-4 Supplementary included earnings for the final pay period amounting to $231,904.48 and that the amount shown as the aggregate of deductions for income tax included the deductions for income tax made for that period, viz, the amount set out for that pay period in the payroll calculations made by the Bank of Nova Scotia, namely $28,499.78.

No part of the amount which the Bank of Nova Scotia had calculated to be deductible from the pay of each employee for income tax for the final pay period was ever segregated and no one holds any funds which it is admittedly payable or alleged to be payable.

In May 1978 the respondent presented to all or a large number of the employees who had received payments pursuant to the resolutions of September 26 a document in the following form, save as to the name of the addressee and the dollar amount.

May 9, 1978

J Cusack,

19 Porterfield Crescent,

THORNHILL, Ontario.

L5T 4T1

Dear J Cusack:

VENUS ELECTRIC LIMITED

You were an employee of the above company on September 24, 1976 at which time we were appointed Receiver and Manager of the company. At that time the company owed you unpaid wages.

We arranged financing for the payment to you of the following amounts in order that you would not be out of pocket as a result of the receivership of the company, and at that time your claim against the company for the monies owing to you was assigned to us.

As requested by the respondent, a considerable number of employees Signed the form submitted. The significance of these signed forms will be referred to later but at this stage it should be remarked that, under questioning from this Court, counsel for the respondent conceded that the words “at that time your claim against the company for monies owing to you was assigned to us’’ were a misstatement of the facts as no written or oral assignment had been made by or asked of any of the employees who had received the payments referred to.

As previously noted, the question in issue is whether the respondent is liable for the aggregate of the amounts allegedly withheld on account of income tax.

If the respondent has any liability to the Crown for the amount it failed to deduct and remit, it must be because that liability is imposed on the respondent by subsection 153(1) of the Income Tax Act the relevant portions of which read as follows:

(1) every person paying

(a) salary or wages or other remuneration to an officer or an employee at any time in a taxation year shall deduct and withhold therefrom such amount as may be prescribed and shall at such time as may be prescribed remit that amount to the Receiver General of Canada on account of the payees tax for the year under this part.

Three requirements must be met in order that liability may exist under that section.

(1) payments to employees must have been made

(2) such payments must have been with respect to wages or salaries due to the employees

(3) the person sought to be held liable must have made such payments.

Each of these requirements will be dealt with in the order in which they are stated:

(1) Were the payees employees?

It is not denied by the respondent that the persons to whom payments were made were employees although the appellant does not allege that the respondent was at any time prior to September 25,1976 the employer of the employees. The appellant submits that to meet the requirements of the Income Tax Act it is not necessary that there exist between the recipient of the payments and the payor an employee/employer relationship.

I agree with this submission. Under all the circumstances the persons who were employees of Venus on September 24, 1976 were employees within the meaning of section 153 and they are recognized as employees by the text of the resolution adopted on September 26; in fact the respondent has not seriously alleged otherwise.

(2) Were the payments to the employees wages or salary?

The submission of the respondent was that the questioned payments to the employees were not wages but were gratuitous benefactions made in order to earn and preserve the good-will of the persons who had been employees of Venus, by providing that the employees should not be out of pocket with respect to work done for that company.

In support of this position, reference is made to the resolution of September 26, 1976 supra, and the alleged assignments made in 1978 by the employees of the amounts received. In this latter connection, counsel for the respondent submitted that by virtue of the payments the respondent was ipso facto subrogated to the employee’s claim for wages. This latter submission was not pressed, upon the Court pointing out to counsel the total absence of any legal foundation for subrogation under the circumstances.

Other circumstances which I consider to be relevant to the determination of this issue are the following:

(a) by virtue of procedures carried on by Venus’ agent the Bank of Nova Scotia in anticipation of the expected wage distribution on the 24th September a determination had been made with respect thereto of

(1) the gross amount earned by each employee;

(2) the appropriate deductions from such gross earnings for income tax, Unemployment Insurance, Canada Pension Plan and any other authorized direction;

(3) the net amount which the employee was entitled to receive in cash or in such other form as was agreeable to him.

The aggregate of the amounts for net payments to employees and deductions from gross earnings were respectively $190,270.01, $28,449.78.

The Receiver and Manager on appointment, being bound to act in the interest of the debenture-holders, not in the interest of Venus, decided that it would be in the interest of the debenture-holder that the operation of property in its possession should continue and that, for, this purpose the good-will and cooperation of the employees was essential; to this end, in making payments to the employees, it elected to make use of the payroll procedure already set in motion by Venus and instructed the Bank of Nova Scotia to honour cheques aggregating a sum of $190,270.01. The cheques so honoured were either the identical cheques which the Bank of Nova Scotia prepared prior to the Receiver and Manager going into possession or cheques in all respects similar to such cheques; the evidence is Silent in this respect.

(b) the respondent did not draw to the attention of the employees that the amounts received by them were gratuitous good-will gestures which did not adversely affect their rights to prove claims against Venus for wages. The information slips which accompanied each payment, showing the amount of gross earnings, and the authorized deductions, set out a net amount which was the same amount that would have been paid on the payroll distribution had it been made in the usual course; the employees were left with the impression that they were receiving wages for which they would have to account on their individual T 1 income tax returns.

(c) notwithstanding the fact that no part of the amounts purported to have been deducted for the final pay period, according to the T4 and T4 Supplementary tax returns filed in February 1977, had ever been remitted, or could be identified as having been segregated, on the strength of the information furnished to each employee on the slip accompanying the payment made to him for the final pay period and on the T4 Supplementary supplied to him, it was reasonable for the employee to assume the amount received with respect to the final pay period was wages upon which he or she would be taxable and that he or she was deemed to have received as wages the amount purported and have been deducted on account of income tax. No steps were taken by the respondent to inform the employees otherwise until the letter of 9th May 1978 already quoted.

In light of the decision of the learned trial judge that the respondent was not a person paying wages it was not necessary for him to decide and he did not decide whether or not the payments to the employees were wages. In my opinion the only inference that can be drawn from the undisputed facts is that the payments aggregating $196,207.01 made to the employees were wages within the meaning of section 153.

3. Was the respondent a person paying wages or salaries to employees?

The position taken by the respondent before this Court was that it was not personally responsible for the act of paying the wages but that, being a receiver and manager it was acting on behalf of others; and that, under the debenture, it was the agent of Venus and incurred no personal liability in result of its activities in causing to be made the payment of wages to employees.

In considering whether the capacity of receiver and manager, in which it was acting, exonerated it from itself being subject to liability under section 153, the presence of certain facts must be recognized.

In the first instance, at the relevant times the respondent was not a re- ceiver/manager appointed by the Court upon whom had been conferred by the Court extensive powers to act. At a later date in November such an appointment was made by the Supreme Court of Ontario, a copy of the receiving order being introduced as evidence; perusal of that order indicates the breadth of the powers exercisable by virtue of that order.

In the absence of any appointment by the Court, the powers and duties of one purporting to act as a receiver or a receiver and manager are to be found by resorting to the instrument authorizing the appointment of such a person.* [1] Exhibit “A-4” is a letter of September 24, 1976 delivered to the respondent by the Bank through which the respondent traces its authority. This letter, the text of which has already been set out, indicates that the respondent was acting in two capacities: (1) Receiver and manager of the property which was the subject of the charge created by the debenture hereinbefore referred to: (2) Receiver under an assignment in favour of the bank pursuant to section 88 of the Bank Act.

No evidence was adduced to distinguish what property of Venus became subject to the charge under section 88 of the Bank Act and what property of Venus became subject to the fixed charge of the debenture upon the crystallization of the floating charge created by it or as to the priority inter se of the two securities on the property of Venus.

Since the conduct of the respondent which is alleged to have given rise to the liability under section 153 was beyond the scope of its office as receiver and fell within the ambit of the powers of a manager as distinguished from receiver simpliciter no further reference will be made to the respondents’ Capacity as receiver to realize the security under section 88 of the Bank Act. Subsequent comments and remarks are related to the consequence of the Acts done by the defendant as manager.t [2]

The significant features of the relevant sections of the debenture are as follows: the debenture confers power on the holder to enforce its rights by entry upon the mortgage property and by taking possession of property charged by the debenture: the debenture holder may appoint by instrument in writing a receiver (under which term is included manager) and such receiver may be vested with any or all of the powers and discretions of the debenture holder: the debenture is to be interpreted according to the laws of New Brunswick: the receiver and manager is deemed to be an agent of Venus and not of the bank.J [3]

The appointment already noted (Exhibit A-4) is a bald one in that its terms do not purport to vest in the respondent any of the power set out in paragraph 4.04 of the debenture. I therefore consider that the respondent, before its appointment by the Court, enjoyed only the powers inherent ina receiver and manager at common-law.

One exercising the office of receiver and manager is acting for the benefit of the debenture-holders. He is not appointed to carry on the business of the company in the best interest of the company; he is appointed to realize the security of the debenture-holders.* [4] While the debenture itself states that the receiver and manager is the agent of the debenture debtor, the chief purpose of this provision (which is a contractual one between Venus and the bank) is to confirm the title that the receiver and manager seeks to confer on any third party dealing with it and to exonerate the bank from any responsibility for acts of the receiver and manager. The powers of the receiver and manager are really ancillary to the main purpose of the appointment which is the realization for the debenture-holder of its security. The receiver and manager is akin to a mortgagee in possession. The receiver and manager taking possession of the property subject to the charge becomes the manager of that property of the debtor but not the manager of the debtor company.

Having gone into possession of the property of Venus for the purpose of realizing that property for the benefit of the bank and being of the opinion it would be in the interest of the bank to use that property in its unquestioned possession to continue the manufacturing and merchandising activities for which the property was suited, the respondent was faced with the situation where there was reason to apprehend that the unpaid wages of the employees of Venus (whose willingness and assistance was necessary to accomplish the desired end) would jeopardize the operation in the future.

Having decided to circumvent these unwanted consequences of leaving the employees to realize their wage claims as best they could, the respondent of its own accord and solely on its own judgment initiated the steps which resulted in making payment to each employee of an amount equal to the amount of his or her earnings actually due. These payments would not have been made if it were not for the decision and direction of the respondent. Even if it be assumed that, so far as the respondent’s responsibilities to Venus were concerned, the relationship between the respondent and Venus was that of agent and principal, the payment to the employees of the amount equal to the amount indicated to be due and payable to them personally according to the payroll calculations for the final pay period was not an act of which Venus was capable at that time. All of its property had been in the possession of the defendant from 1:00 a.m., September 25. The payment of the amounts, which I have concluded were wages, was a result of a decision taken by the respondent in complete awareness of all the circumstances and carried out under its express directions. Even if it be assumed that the bank concurred in the payments being made the person causing them to be made was the respondent.

The attendant circumstances lead to one conclusion only that the respondent was the person paying wages to employees and consequently coming within the ambit of section 153.

Considerable time was engaged in the discussion of the application of a recent decision in the Supreme Court of Canada in “Dauphin Plains Credit Union Limited and Xyloid Industries Limited and Her Majesty the Queen” in

which judgment was pronounced on March 18,1980, [1980] CTC 247; 80 DTC 6123. While many of the statements made therein are relevant to the respondent’s conduct, due to the fact that the issue before the Court in that case was the priority as between the claims of the Crown and the debenture-holders to monies which had been deducted from wages for the purpose of income tax, all that was said in that judgment is not necessarily applicable to the circumstances of this case.

With respect to the quantum of the respondent’s liability, alternative submissions were made

(1) that the default of the respondent was in failing to make, from the wages paid to the employees, the appropriate deduction on account of income tax; as a result the liability of the Defendant was limited to 10% of the amount which it had failed to deduct;

(2) that if the respondent incurred liability on account of failure to remit the deductions, made on account of income tax, the amount it failed to remit should be the aggregate of the deductions for income tax appropriate to wages equal to the actual cash paid to each employee.

Section 227 deals with two distinctly different defaults by persons paying wages. First, the failure to deduct and, second, the failure to remit the amount deducted. The liability imposed in each of these instances is more easily understood if one keeps in mind that when a deduction for income tax is made from wages the employee is deemed to have received, as wages, the amount deducted and is accorded credit for the amount deducted as an instalment on account of the income tax to become due with respect to his income.

If the person paying fails to deduct, his failure has no effect on the liability of the employee for income tax it being assumed that the taxing authority will recover from the employee the full amount of the income tax; the only liability incurred by the person paying the salary or wage is a penalty calculated as a percentage of the amount he has failed to deduct.

On the other hand if a deduction is actually made and the amount deducted not fully remitted the person making the deduction becomes liable to the collector for the amount the employee is deemed to have received as his salary and credit is given to the employee on account of income tax for an amount equal to the amount deducted. In this latter event the liability of the person paying, over and above the 10% penalty which may be assessed on account of his default in remitting is an amount equal to the deductions he had failed to remit together, with interest thereon.

To fix the quantum of the liability of the respondent, it is necessary to settle whether its conduct amounted to failure to deduct or failure to remit amounts deducted.

The T-4 and T-4 Supplementary tax returns for the period up to and including the final pay period, prepared by the respondent, if they stood alone and there were no other evidence touching upon the question, would lead to the conclusion that the income tax relevant to the earnings of the final pay period had been physically deducted and retained for transmission to the Receiver General. In fact there was nothing appearing on the T-4 Supplementary handed to each employee which would in any way disclose to him or her that the amount indicated as having been deducted for income tax had not actually been dealt with as the income tax require it to be, segregated and remitted to Receiver General. Each employee was entitled to assume that the amount appearing on the T-4 Supplementary form as the aggregate of deductions on account of income tax was that for which he was entitled to claim credit against the amount of income tax payable by him for the calendar year.

However, there is uncontradicted evidence to the effect that the aggregate amount of money which was provided by the debenture-holder to the respondent for the purpose “making a payment to each employee by the amount of which they (the employees) are out of pocket with respect to work done for the company as a result of the company’s failure and the company could not pay’’ was the net amount after deduction, which the employees together would have received for the final pay period.

In the light of the evidence, I am of the opinion that the respondents’ default was in not making deductions for income tax rather than in failing to remit any amount actually deducted. Accordingly its liability is under subsection 227(8)—that is, 10% of the amount it failed to deduct.

The assessment made by the Minister with respect to liability under the Income Tax Act fixes $28,449.78 as the amount of deductions with respect to which the respondent is liable for the penalty of 10% provided by subsection 227(8). The aggregate pay roll for the final pay period was $231,904.15 and had that amount actually been available and exhausted on payments to employees and segregation of amounts authorized to be deducted, the aggregate of the deductions for income tax would have been $28,449.78. The amount which the respondent had available to pay on account of wages was however $196,270.01 and its obligation under the Income Tax Act was to deduct from the amount thereof apportioned as the wages of each employee, the appropriate amount for income tax calculated upon the portion of the sum of $196,270.01 which was due to him or her. In the absence of information as to the tax status or entitlement of each employee, the proper amount of the deductions so to be made cannot be calculated by this Court.

The appeal is allowed, the judgment below set aside and in its place there should be judgment allowing the appeal as to assessment #389649 by varying the amount of such assessment to an amount calculated as above described; for these purposes the assessment is referred back to the Minister of National Revenue for re-assessment in accordance with the judgment of this Court. The appellant should have her costs both here and below.

APPENDIX I

4.03

Whenever the security hereby constituted shall have become enforceable and so long as it shall remain enforceable, the Bank may proceed to realize the security hereby constituted and to enforce its rights by entry upon the mortgaged property, or any part thereof, without the consent of the Company or any legal proceeding and may use force, if necessary, to obtain entry and may take possession and get in the property charged by this Debenture and for that purpose take any proceedings in the name of the Company or otherwise and may proceed in any court of competent jurisdiction for the appointment of a receiver or receiver and manager or by public or private sale of the mortgaged property, or any part thereof, or by any other action, Suit, remedy or proceeding authorized or permitted hereby or by law or by equity; and the Bank may file such proofs of claim and other documents as may be necessary or advisable in order to have its claims lodged in any bankruptcy, winding-up or other judicial proceedings relative to the Company. No such remedy for the realization of the security hereof or for the enforcement of the rights of the Bank shall be exclusive of or dependent on any other such remedy but any one or more of such remedies may from time to time be exercised independently or in combination. Provided, however, that in the event of a sale, the Bank shall provide the Company with written notice thereof not less than thirty (30) days in advance of such sale and shall publish such notice once in each week for four (4) consecutive weeks in a daily newspaper of general circulation published in each of the Cities of Saint John, Fredericton, Halifax, Montreal and Toronto, Canada. Thereafter it shall be lawful for the Bank absolutely to sell and dispose of the mortgaged property and their appurtenances or any part thereof either by public auction or private contract or part thereof one way and part the other for such price or prices as to the Bank shall seem reasonable. All contracts which shall be entered into and all conveyances which shall be executed by the Bank for the purpose of effecting any such sale shall be valid and effectual notwithstanding the Company shall not join therein or assent thereto and it shall not be incumbent on the respective purchasers of such mortgaged property or any part thereof to ascertain or enquire whether such notice of sale shall have been given. The Bank shall be at liberty to bid and buy at any sale by public auction only.

4.04

Whenever the security hereby constituted shall have become enforceable and so long as it shall remain enforceable the Bank may by instrument in writing appoint any person or persons, whether an agent or employee or employees of the Bank or not, to be a receiver (which term shall include a receiver and manager) of the mortgaged property, or any part thereof, including any rents and profits thereof and may remove any receiver and appoint another in his stead. Any such receiver shall for all purposes be deemed to be the agent of the Company and not the agent of the Bank. The Bank may from time to time fix the remuneration of such receiver and direct the payment thereof put of the mortgaged property. Any such receiver may be vested with all or any of the powers and discretions of the Bank. All moneys from time to time, received by such receiver, shall be paid by him—first, in discharge of all rents, taxes, rates and outgoings, affecting the mortgaged property; secondly, in payment of his remuneration and cost incurred as a receiver, including all legal fees incurred by solicitors engaged by him on a solicitor-and-client basis and their agents; thirdly, in keeping in good standing all liens and charges on the charged premises prior to the security hereby constituted if any; fourthly, in payment of the interest accruing due on this Debenture and/or in payment of any principal due and payable upon this Debenture as the Bank see fit; and other sums and the residue of any moneys so received shall be paid to the Company. The Bank in appointing or refraining from appointing such receiver, shall not incur any liability to the receiver, the Company or otherwise.