Page:Federal Reporter, 1st Series, Volume 9.djvu/374

 HANCOCK V. HOLBROOK. 359 �powers were given to him in the board of directors in consideration of the Bame agreement; that -when he suflfered default to be made in the payment of the bond, and permitted the publishing establishment to be applied to its satisfaction, he violated a quasi trust; and that, upon his purchase of the establishment, he must be treated as hold- ing it in trust for the complainant to the extent of his former propor- tionate interest. On behalf of the respondent, it is elaimed that all of the stock, except that held by the complainant, has for a long time been owned by them ; that the reason of the sale to Hernandez was not any wish or purpose to defraud the complainant, or any of the stockholders, but that the causa which necessitated it was the incura- ble dissentions between Walker, A. M. Holbrook, and the complain- ant, and a continued refusai on the part of complainant to cOmply with the charter and by-laws inade in pursuance thereof, so far as related to the conduct of the paper; and that in consequence ofthis dissension on the part of those in interest, and the defection of the complainant, the paper became so erippled financially that it was impossible for A. M. Holbrook to pa,y the bond at maturity, and the only wise disposition of the pa,per that could be made in the interest of all the eorporators was to apjily its entire establishment to the payment of its sole debt. �As furnishing aid in solving this question, it is important to deter- mine whether the sale to Hernandez was made in order to enable a disrupted corporation to dispose justly of its assets in payment of its debt, or whether it was a step in a fraudulent scheme to convey the property through Hernandez to Holbrook. The action of War- moth would fairly indicate the controlling purpose of the movers, as his liability to indemnify Hernandez for his becoming security on the $20,000 bond must have led him, and his intimate relations with both Holbrook and Hernandez must have enabled him, to know thoroughly the transaction from beginning to end. His action in this matter stands for that of Holbrook. He (Warmoth) testifies on this subject that, after learning of Holbrook's inability to pay the bond, he informed Alexander Walker — who, it must be remembered, stated, in his protest against the conveyance to Hernandez, that he represented the entire non-assenting stock, ineluding all of complainant's — "that if he or any of his friends would pay the bond, they should have the property, namely, the Picayune establishment. At one time he said he would pay the bond and take the property, which he never did." This is confirmed by the testimony of Judge Walker. �If Holbrook had proposed to defraud and to acquire title by having ��� �