Birmingham age-herald., 1895-04-30
AN OPINION BY McCLELLAN.J.
Lengthy, Yet Lucid, Is to that End and
 Effect.
TRUSTS ARE EXPRESSED AND IMPLIED.
Their Nature and Functions rSet Forth. Preccdents Bearing Upon the Case in Point--Analysis of the Equity of
 Relief-G Grounds of Reversal.

The supreme court, in an opinion by MT Justice Mcclellan. has declared that the trust fund theory in respect to coz porations does not exist in Alabama any longer This decision is of great impor- tance and interest. not only to lawyers, but to the commercial and industrial world. The full text follows:
 The Opinion
 The State of Alabama-Judicial Depart ! ment. The Supreme Court of Alabama.
 November term, 1S94-5. Sixth division.
 518.
 The O'Bear Jewelry company, ct al. vs.
 $. Volfer & Co. ct al.; appeal from Bir-
 mingham City Court.
 Mcclellan, J.-The present bill is filed by Vofer & Co. and others as judgment creditors of the O'Bear Jewelry company, corporation. Said corporation, R. D. Johnston, the Alabama National bank, c. s. O'Bear, Jr., w. G. O'Bear, r. c. O'Bear and w. B. Copeland arc made parties defendant. It is made to appear by the bill that the O'Bears and Cope land organized said corporation with proposed or nomipal capital of $25,000. divided into 250 shares of $i00 each. Of these G. S. O'Bcar subscribed for eighty shares, or $S000, to be paid by transfer
 
 of jewelry, store fixtures. etc. w. G. O'Bear subscribed for thirty shares, or $3000, to be paid by transferring to the corporation a lot of miscellaneous jew elry, list of which was, according to the report of the commissioners, in their hands, Mrs. r. c. OBear subscribed for twenty shares, or $2000 with the privilege of paying for the same by delivering to the company certain gold watches (2S) and diamond rings (3). And w. B. Cope land g1hcpt.ihp6 for twpnt Sha fO hr paid in money. The corporation organ ized in February, 1888, and a report was made to the probate judges office setting forth that said subscribers for stock had made the transfers of property and the cash payments, as provided for in the terms of their respective subscriptions. The bill ayers that said Copeland did not and has never paid the 5000 sub- scribed by him, but still caves the same; that the stock of goods, etc, which was paid to and accepted by the commission CTS in satisfaction of G.. $. O'Bear's sub Scription of $S000, was not worth more than $4000, was fraudulently accepted in full payment and that said c. S. O13ear still owes the balance of $4000 that the lot of jewelry with which w. c. O'Bear was to pay his subscription of $3000 and which was so accepted was worth only 5000, and hence that w.. G. O'Bear still owes the balance Of $2000; that Mrs. r. C. OBear did not pay the amount Sub- scribed by her either in property or money and still owes the same. Said G. $. O'15ear and w. B. Copeland were the commissioners appointed by the probate judge to open books of subscription to the capital of said corporations; and the bill charges that the pretense and repre- sentation that said w. B. Copeland had paid his subscription in cash and that Mrs. F. c. O'Bear had paid her sub scription by the transfer of watches and three diamond rings, when in truth no such payments were made and inc cessive valuation of the property trans ferred by G. s. and w. G. O'Bear were knowingly and Intentionally made by colluson and agreement among said mcorporators and constituted fraud upon persons who might become cred itors of said corporation The corpora tion upon organization commenced and continued business until December, 1888, or January, 1889, when most of it's stock of goods was destroyed by fire, and since then it has not carried on it's bus mess. While carrying on its business the corporation bought large quantities of merchandise and at the time of the fire had on hand goods amounting in value to many thousand dollars, which were insured to a large amount. and it was agreed that the insurance compa- nies should pay the corporation the sum of $7000 on account of said loss. At time of said fire the corporation was indebted to compliments in the several sums stated in the bill, and to divers other per- sons including the Alabama National bank, to which it owed S2500, and was then and ever since has been confessedly insolvent, the bulk of it's assets, after the fire, consisting of the sums owing it by the insurance companies. The bill further ayers: That for the purpose of preventing complainants and other cred itors of said corporation from subjecting said insurance money to the payment of their debts, and to save the same, or as much threof as possible. to said incorpor- ators, said company assigned and trans ferred the policies of insurance held by it to the Alabama National bank before the dispute which had arisen between it and said insurance companies had been settled, and compliments charge that for said transfer there was no consideration except that said corporation was indebted to said bank in the sum of $2500, as afore- said, and that said bank received in cash on account of said policies sum not less than $7000, and, after appropriating to itself suf1iciency to pay the debt due said bank, it paid over the balance amounting to the sum of s4500. to the per- sons who composed said corporation or to some of them or for their personal ac- count" The bill further ayers: Com plainants are advised that said Gnsur- ance) money, as we'll as all the other property of said corporation, was a trust fund, and after said fire and the in-