The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-06-06

Judge Hiles yesterday rendered his
decision in the case of Edward T.
Singer VS.. the Salt Lake City Copper
Manufacturing company ct al
The following is the opinion, which
is a very important one. involving
large interests:
In this case find from the pleadings
and evidence that on the 1st day of June
a sSSi Od the defendant corporation borrowed
Singer and defendants l.. d. Schoenbere.
Samuel W. Peck and Harriet L. Green
that is TO say, $4,000 from plaintiff. $780,
0UJ from l.. ID. Schoenberg, $4,000 from
Peck and $4,000 from Harriet L. Green.
THAT on that date the defendant cor
poration executed and delivered its prom
lssory note TO each of those parties for
the amounts above named loaned by each
OF them, and TO secure the payment of
the same executed and delivered to David
May, as trustee for them, trust deed of
all the property. real and personal. then
owned by the corporation. but not its af-
ter acquired property.
Il find that this transaction was au-
thorized by the board of directors at legal
meetings of the corporation. 1t appears
from the evidence that the trust deed to
May was not placed upon the records of
salt Lake and Box Elder counties. Utah.
where the property conveyed was situate.
and that 1t agreed among the direct
orS OF the corporation, including Mr.
Singer, that the deed should not be
placed OF record, but such arrangement
was not known to either Mr.. J.. D.
Schoenberg. or Mr.. Peck. or Mrs Green,
nor did thew. either of them. cors-n6
that it should not be placed of record.
The money which was obtained by this
loan was used to pay off the then exist
ing Indebtedness of the corporation. ex-
ce9t the Indebtedness to Gillette Herzog
Manufacturing company. for materials
furnished the copper company, which was
thereafter reduced to a judgment in this
court for 81. 80. % and s12s. 40 costs.
The evidence shows that on the 24th
day of September. 1894. the copper com
Deny was indebted to w. S. Mccormick
or - s. Mccormick & CO.. bankers OF
Salt Lake City, in about $4,000 for money
loaned: that thereunon David May, j. E
Schoenberg and Andrew Saks, who were
three of the directors os the corporation.
in consideration of such Indebtedness and
OF the then present advance by McCor-
nick of an additional S25 600. executed, in
the name of the corporation, three prom
issory notes.
First-A note for $4,000 to a. Hanauer
for the benefit of Mccormick.
''Second.-A note to Otto Stalman for
s.. 200. and third, note to said David May
and Andrew Saks for S50.0oo And to Sc
cure the payment of these notes they
executed and delivered to Hanauer
trust decd, purporting 10 be the deed OF |
the corporation, conveying 10 hahsiuer
all the property. real and personal, OF the
after to be acquired by il.
BY an express PROV ision in the deco
there was declared the tOaowrg priorlc
ties in respect of the fol!oT-ES items Oh
indebtedness owing by the co.goi4tloh' !
and preferences. in respect OF the pay
ment thereof:
est parable to the order CT a. Hanauer
sSecond.-After the payment OF the sald
last mentioned note. beth pFincip2l ana !
interest, then the following notes ai S5
IL. ,n a
of trust. without preference or priority /
of payment to-wit: The said 3D note
to Otto Stalman, and the said SoOooO note
TO Andrew Saks and David May
aThird.-After the payment OF the alore-- |
said rotes. both principal ana lhtereSs ', /
in the order hereinbefore stated. then the
remainder OF said notes both principal /
and interest to-wit: The note OF 5000 I
to L. d. Schoenberg, the note OF Sz0'oVO /
TO S. W Peck. the note OF Sz9.evl 10 /
Harriet X Green. and the note OF $4,000 |
TO Edward Singer.
When the notes to Hanauer. Stalman,
Saks and May were given and the trust
Mccormick had fun knowledge OF the !
deed of June /. 1891. in favor of Singer,
Green, Peck and l.. ID. Schoenberg-
AT the time thet latter notes ana
trust deed were given. the corporation
was insolvent, as was well known TO all
the parties. At the same time both Nc,
Cornick and Stalman. as also SaEs and
Nav knew os the first and unrecorded
trust deed as before stated. Mr. McCor-
nick had notice of ii as early as June
L. 1894 when he was informed of it by
This second trust deed. as between
May and Saks and the beneiiciaries of the
first trust deed. and all the bona hde
creditors of the corporation. is void
-'First.-Because they were directors of
the corporation. and were thereby at
tempting to secure themselves, for an
antecedent Indebtedness due themselves
from the corporation, the evidence show
ing that they advanced no money, or
other valuable present consideration Wnen
they took the $4,000 note.
''Second.-Because the meeting at which
the notes and trust deed purports to have
been authorized. was not called meet
ing under the statutes under which the
corporation was organized, and was not
called as required by article Z of its arti-
bylaws. On this latter ground. the trust
deed is void as between Hanauer. his cest
que trust. and the bona fide creditors of
the. corporation.
II find from the evidence that the SIS. 600
note mentioned in the second trust deed
so called. was on the 10th of January.
of New York. At that time the note was
overdue and moreover Harrison then
had full knowledge of the Singer, Green.
l. D. Schoenberg and Peck notes, and of
the trust deed securing the same.
Il find from the evidence that plaintiff
Singer was at the time he took the note
secured by the first trust deed. director
of the corporation that II was not then
insolvent, or at least known by him TO be
insolvent and that he advanced the $2o.O10
evidenced by the note, TO the company in
good faith. at the request of the board
of directors, to help the company out of
what was then supposed to be tempo
rary embarrassment, and that the money
which he advanced well as that ad-
vanced by l.. d. Schoenberg, Peck and
Green. was used to pay the then existing
Indebtedness of the company, except that
of Gillette. Herzog & Co. The evidence
shows that when the latter Indebtedness
was created. and the materials were fur
nished, Singer was manager of the Cop
per company. and knew Gillette, HerZog
& Co. were creditors and had. and We're
then, furnishing materials which were
used IN the construction of the copper
plant: therefore think under all the cir
cumstances of the case Mr.. Singer should
be postponed to the claim of Gillette,
Herzog & Co.. above mentioned.
1.-THE ground of this decision in brief
is. that | do not think director of
corporation ought in equity to be per-
mitted in any case to give himself a
preference or a lien on the property of
the corporation, TO secure mis- own debt,
ANg4TGrsI