, 1874-01-07

'. Boom, l9 johnson T., 458, and NUMEROUS other
and in Meyer Vocke, Assignee docidei with ths.1
n ths case before us the Assignee Of the bankrupt
IN me interest OF tie creditors has right to inquire
of the shareholders Of the Company and on thst IN.
"1ry. we are Of opinion that, to these creditors
We do not base this upon ths Ground thai no money
actually passed between the parties 1t would have
been jnst the same Il agreens beforehand to turn the
moneg with hun, paid It, taken receipt tor It. and
carried away with him. THIS would be precisely the
equSaent Of the exchange OF checks between tho
uea IL The intent and purpose Of the transaction
which forbds It to be treated Talid payment It In
the change OF the character Of tie debt from oue Of
The debt ceases by this operation II eectua1 to be
tue trust fund to which creditors can look and becoe
ordinary assets with which the Directors may deal as
And this ~as precisely what wns destined by the
paites It divested The claim against the stocholder
and tho Directors to deal with it freed from that
charge. Thers arc three four Of these cases now
before us IN which precisely the thing as done
aud We hnVe no doubt II done by this Company In
regard to all their stockholders.
.a shsFofe M regnlar system Of operattons to
holder and the corporation.
We do not believe VIC characterize It too strongly
when We say that it was fraud upon the public who
we're expected to deal with them.
The result Of IT was that the capital s3ock of tho
Company ;1 "as neither paid up in actual money nor
Ae~AAA
t is ssidy arpe1nnts counsel that coneedng this,
time that he became the owner Of the deo due BY the
corporation to Hayes and. therefore, tho proper sub
jeet to sood under sec ~ Of the Binkfupt act That
OF mutual credits between tie parties, the account be-
tween them shall be stated aud debt set OF nganst
tbs other, and the balance only shall be allowed OF
paid but no set-on sha be allowed OF claim in its
nature not provabc aEainst the estate: Iroridei,
that set-of shall be aowed in favor Of any debtor
IN fh& Inv ,$
to him utter lne tug OF the petition"
This section no. intended to erlarge the doc
tsine OF seton, to enable party to make set-on
in where The principles Of legal equitable set-
on did not previously authorize it.
The debts must be mutual, must DO in the same
right,
The case before US is not Of that character The
deLt which appellant owed for his stock vas trust
Ournpany. As soon the Company became lnso-
rent, aud this fact became known appellant the
right Of seso for ordinary debts to its full
cesed. It bccA1ne fund belonging equally In equity
to al the c1edtors aud could not Be appropriated by
the debtor to the exclusive payment Of lis OWL claim
II is g. into The inqst whether thts
Of bankruptcy by the Company, or the effect Of tbs
bankruptcy proceeding. Ths result would be the
same ths corporation III the process Of nquida-
iou III the hands Of Trustee or under other legal
proceedngH Il would siu renlafn true that the IN
paid stock trust fund for all the creditors, which
coud not be applied exclusively TO the payrt Of
claim though held by the stockholder who owed that
amount on Lis subscription.
Nor do th1nk tbs relation OF the appellant in this
case to the corporation is without weight in tbs sol
ton OF the question bofora 1t is very true that
by the power OF the Legislature there Is created, in
all acts of incorporation legal entity which
tact with its shareholders In tho ordinary transactions
of business as with otler PERSONS It can buy Of
them, sell to them, lean to them, and, in insurance
make contracts OK insurance with them, in
all II Which both parties bound By the ordinary
laws Of contlact. The stockholder is also relieved
petsoual liability for the debts Of the company
Bit, after a this articta body is but the represents
tive of A stockholders, aud exists mainly for their
tbs officers whom they eject. And the interest and
power Of legal control Of each SHAREHOLDER Ia in exact
the amount Of lis stock 1t IT, therefore,
but just that when the interest OF the pEbitc OF Of
strangsrs dealing with this corporation, "a to he .aec
ed by uny transaction between the stockholders who
own ths corporation aud the corporation itself.
Ruch transaction should be subject to = rigid
scrutiny, and, II found to be infected with
uytAiug unnir towards such third person. calculated
to njure him. designed Intentionally aud inequlta
Of the general Creditor It should be dieregarded
ann.lied far as It may inequiteby affect him. Law-
renee Nelson, II New York H., 1857
These print pes require :he affirmation Of the de-
cree in the present case aud it is accordingly 80 Or
1ered.
The cases Of Meyer, appellant '. Yocte, Assignee;
and Of Jaeger plaintiff tn error, Tocfe. Assignee,
from the same Court though differing in Of the
facts the Latter especially being suit At law brought
by the Assignee Of the bankrupt corporstou in which
cases the The case ut law was submitted to
tle Court without jury, aud tle facts found by the
Court bring 1t within the doctrines have Just de-
:lared to BE- applicable to such cases.
Tia decree in the case OF Meyer Woke, Assignee
Ind the judgment in tAe Of jaeger " Focke, As
;ignee, are, therefore, affirmed.
Mr. Justice Hunt lisren.cd, holding that the tzans-
sctQu Waz 4 loan by tha Cp4l,4ny to tue appellant.