The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1917-11-24
Supreme Court
Decisions
From Wells County.

The John Miller Co, corporation,
plaintiff and respondent, VS.. The Har~
vey Mercantile Co, Ltd, q corpora
ton, et al. defendants and appellants.
/. Under the seQuestration pro-
ceedlngs which are authorized by sec
ton 1888 Of the compiled laws of
1913, not only may numerous fraudu-
tent grantees be Joined as defendants
with the corporation itself; but all Of
hcers and stockholders and other per-
sons who have inquired a liability to
the corporation. The purpose OF the
statute is to provide a means for col
lecttng into a general fund all of the
assets Of an insolvent corporation SO
that not only the debt due to the petit
toner may be paid, but that, if de-
sired, all other debts of the concern,
and that it's AFFAIRS may be wound up.
2. The word debtor" In section
1918 Of the compiled laws of 1918,
which provides that: "A debtor may
pay one creditor in preference to an
other or may give to one creditor Sc
curlty for the payment of his demand
IN preference TO another" includes
corporations as well as general part
nerships and individuals and gives to
corporations equally with individuals
and general partnerships the general
right TO prefer one creditor above an
other.
3. An allegation in the complaint
that an assignment of certain of the
assets Of an insolyent corporation was
made TO trustee lin trust to con-
vert into cash and distribute the pro-
ceeds, less collection charges, among
the certain defendant creditors to ap--
ply on their claims against said cor
poration" does not show an illegal
transfer, there being no. allegation
either that the payment was in full
and would exclude such creditors
from recovering any balance that
might be due, or that there was or
was expected to be any surplus which
was to be repaid 70 the debtor cor
p0ration. or that a general assign
n-ent was made or attempted.
4. Although an insolvent corpora
ton may as generafrule prefer Ger
tain Of It's creditors, the assets of a
corporation are nevertheless a trust
fund FOR the payment of it's debts to
the extent that the creditors have
lien upon them which Is prior in point
OF right to any claim which the stock
holders or directors as such can have,
and the courts should be astute to
defeat any scheme or device which is
calculated to withdraw this fund or
IN any way to place It beyond the
reach of creditors
5. A complaint states a cause OF
action against both the directors OF
an insolvent corporation and it's fa-
vored creditors, which charges that
a scheme was planned and participat-
ed In by all of the defendants to
place all Of the property and assets
beyond the reach Of the plaintiff
creditor and other creditors similarly
situated, to convey to the directors
certain Of the assets, and to make
unlawful payments thereto and gem
orally to divide all of it's assets be-
tween the said directors and the said
favored creditors.
Action to sequestrate the assets Of
an insolvent corporation.
Appeal from the district court Of
Wells county; Hon. y. IA. Cofkey, j.
Order for plhintiff everything de-
murrers to complaint
order reversed. Opinion OF the eourg
by Bruce, o. u. Grace and Robinson
JJ.s cOhcur in result only.
From Nelson County.