Page:Federal Reporter, 1st Series, Volume 9.djvu/549

 53e federal befobteb. �of Tome and against the corporation for the araount of his claim sued for; and; accordingly, the next day, October 23, 1878, such judgraent was confessed for the sum of $19,248.53. Save for such action of the board, judgment could not have been obtained in that suit until after the firat Monday of November, 1878, — the return-day of the ■writ of summons. �At the date of the special meeting of the board of direetors the cor- poration was insolvent, and this must have been known to the board, whose purpose in authorizing the confession of judgment undoubtedly was to give Jacob Tome priority of lien over C!oons & Braine. I am, however, satisfied from the evidence that there was no actual fraud in the transaction, either on the part of Tome or the board of direct- ors. The claim in suit was an honest debt due Tome, and the corporation was without defence. It may be assumed, too, that the board entertained the conviction that the claim which Coons & Braine Were pressing to judgment was not a meritorious one, and doubtlesB the board believed they had morally and legally the right to prefer Mr. Tome by giving him the prior judgment lien. �But could the board of direetors, under the circumstances, give such preference to Jacob Tome, who was both a director of the corporation and the president, and also the principal stockholder, owning, indeed, at least eight-tenths of the entire capital stock? . I am of opinion that they could not. The mortgaged premises, it is shown, are wholly insufficient to pay the principal of the mortgage debt ; and if the lien of Tome's confessed judgipent is to prevail over that of Coons & Braine, the latter will receive nothing out of the assets of this insolvent corporation. Such a resuit, thus brought about, would be so inequitable that it cannot receive judicial sanction. True, a fail- ing debtor, ordinarily, may prefer one crediter over another. But the circumstances here were such as to take the case out of the general rule. The direetors of a corporation stand in confidential relations to its creditors, towards whom they are bound to act with perf ect fairness. They are, at least, quasi trustees for the creditors; and where the corporation is insolvent, good faith forbids that the direct- ors should use their position to save themselves, or one of their num- ber, at the expense of other creditors. Dniry v. Cross, 7 Wall. 302 ; Jackson v. Lvdeling, 21 Wall. 616 ; Richards v. New Hampshire Ins. Co. 43 N. H. 263. �The special prayers of the bill in respect to Tome's said judgment are that he may be restrained from proceeding to enforce it by exe- cution, and that it be declared null and void. But this is not the ��� �