The Helena independent. [volume] (Helena, Mont.) 1875-1943, 1891-05-23


bank would loan him money from time t.
time The contention that this agreement
was q secret lien and a fraud was not sus
tanned by the court because made by = msr
chant when solvent and under no apparent
danger OF failure and undcr no circum'
stances which permitted an inference o!
fraud as against any creditors. ba'
concerning such an 9nders'sna.
ing between debtor md creditor
the learned justice says: Upon such al
inquiry, the personal and business connec-
tions, and even the social and domestic re-
lations of the parties, might be deemed
significant. and SO the facts which afford
the best motives for q proper preference
might be converted into proof that the
preference was given in contamination OF
an unlawful understanding or assurance
given when the credit was obtained. Such
a doctrine. if established. instead of con-
stitutins u healthfui restriction upon the
right Of preference, would amount to a
practical denial of the right i'll the cases
wherein, If in any, it may be meritoriously
exercised. / do not doubt that a promise
to secure or to prefer u creditor, made at
the time the credit is given, may 6e fraud
ulent. but it must be when a fraud is in
tended, or when the circumstances within
the knowledge of the creditor are such that
he must nov that injury to others will
probably result"
1T is interesting to observe that this de-
cision of Judge Woods reversed the same
case which had previously been decided by
so eminent n man rs Judge Gresham, who
held, while sitting rs n district judge. that
such q secret agreement was per Sc fraudu-
lent az against outside creditors. This
opinion of Gresham ollow the unhroken
line of English authorities, while that of
Judge Woods cites no cases directly upon
the point. Sustaining Judge Woods opin-
ion. however, is the later case of Park Ma
tionsl Bank VS.. Whitmore, 1o4 N. Y. 297,
which differs from the ruling of tho SUI
preule court of New York in the same case
decided in 40 Hun. 400, following the
opinion of Judge Gresham and the English
cases.
I'VE believe that our conclusions as to the
law of this case are also sustained by the
opinion of the Illinois supreme court in the
case of Roseboom vs.. Warner, decided Jan.
81, 1890. The court by Bailey, judge, says;
so long as a corporation remains solvent.
it's directors may, with the knowledge of
the stockholders, deal with the corporation.
loan 1t money, take security or buy proper
ty of it, the same as a stranger; that during
the solvency of the corporation the direct
ors are the agents or trustees of tho stock
holders, and owe no duties or obligations
to others but that the instant the corpora
ton becomes insolvent their relations and
duties become materially changed. The as
sets of the corporation then become a trust
fund for the payment of its creditors, and
the directors can no longer deal with them
for their own advantage, or in such way as
to gain priority for themselves over other
creditors. They are then within the scope
of that wise and equitable rule adopted by
courts of equity for the protection OF
ccstuis que trust or benefciaries, which
prohibits trustees and persons standing in
similar tiduciary relations to exercise their
powers or manage or appropriate the prop
e-ty of which they have control for their
own profit or e~molument, or, rs it is some
times expressed, shall not take advantage
of their situation to obtain any personal
benefit to themselves at the expense of the
cestui que trust. hat the appellants come
within the prohibition of this rule is beyond
controversy. They constitute three-fourths
of the board OF directors and therefore had,
practically, the absolute control of the
corporation. and its entire corporate action.
They were perfectly we'll aware that the
corporation was lnsolvent, and wholly IN
abls to meet its obligations. With this
knowledge, and as is perfectly obvious from
the evidence. and as the appellants. in fact,
admit, with the intention of obtaining for
themselves a preference to the exclusion of
all the other creditors, they, by their own
votes, passed q resolution providing for the
execution to themselves of said Judgment
note, and one of their number. being treas
urer, carried out the resolution by execut-
ing and delivering said note. They then
caused Judgment to be Immediately entered,
and an execution thereon to be issued and
levied upon all the tangible property OF the
corporation. 1t would be difficult to find a
csse more imperatively calling for an appli-
cation of the rule above stated than this
again, upon the point raised by plain
tiffs that an assignment is valid in Mon
tana unless accompanied by an affidavit
that the transfer is made without intent to
hinder, delay and defraud creditors as re-
auired by sections 1000 and 1888 OF the
fifth lewiston. revised statutes. we hold
tina such an affidavit is necessary, and that
without it the assignment IS void and of no
effect. We. therefore hold, after due de-
liberation, that the assignment made by
Boesmann Bros. q Co. to r. H. kleinsckmidt,
assignee. is null and void as to plaintiffs i'll
this action. and that the property sought
to have been assigned must be subjected to
plaintiffs claims. Ordered, therefore, that
a decree be drawn i'll plaintiffs, favor in
conformity with this opinion and In &C
cordance with the findings of fact and con-
| illusions of law herewith fled