Court Opinion

ID: 9830557
Source: CourtListenerOpinion
Date Created: 2023-09-01 20:17:11.032335+00
Date Added: 2024-06-11T07:43:24.305473
License: Public Domain

On Motion for Rehearing.
The statement of facts shows that the last report filed by the master in chancery was introduced in evidence. That report embodied findings of fact by the master, including the following: The stockholders’ meeting of the Montex Corporation on September 4, .1928,- and the resolution passed at that meeting, as set out in our original opinion, authorized the board of directors to “refund the company’s present indebtedness by the issuance of serial debenture notes, secured by a lien on the company’s assets, and payable upon' such terms and conditions and bearing such rate of interest as may be fixed by the board of directors, said issue to include all the present indebtedness of the company,” and the fact that Alta Dockery was ■present at that meeting by her attorney and proxy, E. M. Hyder. Also the resolution passed by the board of directors on September . 5, 1928, authorizing the officers of the corporation to issue promissory notes of the corporation not to exceed the aggregate of $50,-000, and to execute a deed of trust to secure the same upon all the assets of the corporation, and the notes and proceeds thereof to be used to liquidate the present outstanding indebtedness of the company “on a pro rata basis.” Also the further finding that a deed of trust was executed on September 15, 1928, by those officers; that its execution was “in pursuance of the authority of ithe stockholders in meeting assembled and in pursuance of a resolution of the board of directors as appears in the minutes of said corporation”; and the deed of trust was executed to secure the payment of 600 notes signed by the Mon-tex Corporation, each for the sum of $50; with the further finding that “this deed of trust was probably prepared by Mrs. Dock-ery’s attorney and shows knowledge of the directors’ resolution.” Also the further finding that on September 28, 1928, 300 of those notes were indorsed and delivered to Mrs. Alta Dockery and the sole consideration for such delivery was as collateral for the prior indebtedness of the corporation to Mrs. Dock-ery evidenced by a promissory note of $4,-227.27. Also that the Montex Corporation was during all this time financially embarrassed and in imminent danger of insolvency, if not actually insolvent, and that fact was well known and understood by everybody concerned. There was a further finding that in the bankruptcy proceedings later instituted by certain creditors, Mrs. Dockery, as inter-vener, joined the corporation in pleading that the deed of trust above referred to did not create a preference but was intended for the benefit of all creditors. Following a recital of those facts, the master further found that Mrs. Dockery having participated in the stockholders’ meeting, on September 4, 1928, knew, or was charged with knowledge, that the notes which she took as collateral for her existing indebtedness were authorized by the stockholders only for the purpose of refunding all the indebtedness of the corporation, without preference to any particular creditor. That she had notice that when the vice president of the corporation delivered to her the 300 collateral notes secured by deed of trust upon all the property of the corporation, he was acting beyond the scope of the purpose for which the notes and deed of trust were authorized by the stockholders.
The facts so found by the master and introduced in evidence were sufficient to sustain the attack made upon the former judgments of the trial court, classifying the Dockery claim as a preferred claim, and ordering the payment of the same as such, on the ground that those judgments were procured by fraud, and therefore the judgment from which this appeal is prosecuted must be sustained on that ground, even though the former judgments of the court fixing the Dockery claim as a preferred claim in accordance with the recom*1023mendation ef the master be construed as final judgments and conclusive as against all attacks except fraud, accident, or mistake inducing their procurement.
Accordingly, appellant’s motion for rehearing is overruled.