Court Opinion

ID: 7003517
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:46:18.79629+00
Date Added: 2024-06-11T16:09:49.018064
License: Public Domain

Mr. Justice Harker delivered the opinion of the court. The only question presented by the assignments of error is the action of the court below in dissolving the injunction. JSTo question is made as to the good faith of Jack’s judgment or the legality of the service had upon the defendant. As we understand it, appellants base their contention entirely upon the proposition that Jack, being a director, could not enforce the collection of his judgment until all other creditors had been paid in full. There is no law that inhibits a director from loaning money to his corporation, or from collecting from it by judicial proceeding. Beach v. Miller, 130 Ill. 169; Mullanphy Bank v. Schott et al., 135 Ill. 655; Illinois Steel Co. v. O’Donnell, 156 Ill. 624. The law is, however, that an insolvent corporation can not prefer a creditor who is at the time a director. The reason is that it would be inequitable to other creditors to allow a directorio thus take advantage of his official position. Any affirmative action by which the insolvent corporation turns over its property to its directors is voidable for the reason that they are in equity trustees with regard to the corporate property in behalf of the creditors at large. Blair v. Illinois Steel Co., 159 Ill. 364; Rockford Grocery Co. v. Grocery Co., 175 Ill. 92. But we do not understand the authorities to go so far as to hold that a director may not, in good faith, pursue the usual and ordinary course in obtaining and collecting a judgment against the defendant corporation, although at the time insolvent. We are unable to see how the commencement of a suit and the obtaining of a judgment by the ordinary mode of service of summons, etc., amounts to a preference or at all clashes with his duties and relations as a director. Independent of that question, however, there is another ground upon which the court was justified in dissolving the injunction and dismissing the bill. The only property owned by the coal company was the real estate in question, which was sold under foreclosure decree on December 22, 1897. Its right to redeem expired on December 22, 1898. Jack did not obtain his judgment until February 7, 1899—after the coal company had ceased to have any interest in the property. It had no property in regard to which Jack, as a director,' sustained any trust relation. Hot only was all of its property gone, but for over a year it had ceased to perform any of the functions for which it was organized. For all practical purposes, it was defunct. Having failed to redeem from the foreclosure sale, the rights of the coal company in the property, and all persons claiming by, through or under it, were forever gone, and a sale o£ the property on the execution of a junior judgment would be the sale of nothing belonging to it. Fitch v. Weatherbee, 110 Ill. 475; Smith v. Mace, 137 Ill. 68. Decree affirmed.