Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/674

 § 653.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XI. claims arose. 1 From the moment, however, that a person becomes a creditor, the corporation owes it to him to satisfy his claim from the corporate funds, and is under a duty towards him which he may enforce, not to waste the corporate funds, or divert them from the purposes for which they were set apart, so as to prevent the satisfaction of his claim. 2 From that moment the corporation, having in charge funds in regard to which the creditor has rights, occupies, because it has such funds in charge, 3 a position of trust towards him. Moreover, when subsequently the corporation or its representatives deal with persons who are not yet creditors, they represent the creditors, whose rights have already arisen, to this extent, that the rights of the latter in the corporate funds are ordinarily bound by the acts of the corporation or its representatives. 4 § 652. The classes and legal characteristics of the acts which are binding on the corporation, as representative of the inter- ests of all persons in the corporate enterprise, are discussed in Chapter VII. , the chapter devoted to the treatment of the ef- fect of acts done by or on behalf of a corporation in occasion- ing legal relations between it and persons with whom it deals. The present chapter is taken up with the discussion of the rights of creditors who by some transaction have acquired a valid claim on the corporate funds. § 653. The corporate constitution specifies, among other things, the objects of incorporation, to which the corporate funds are to be applied. To the applica- tion of the corporate funds to these objects in accordance with the constitution a creditor cannot object. As long as the affairs of the corporation are being carried on in good faith and in accordance with the Creditors have no voice in the corporate manage- ment. 1 When a corporation, solvent at the time, with no actual intent to defraud its creditors, conveys its lands for an inadequate considera- tion, its subsequent creditors cannot question the transaction. Graham v. Railroad Co., 102 U. S. 148 ; cf. Nix v. Miller, 26 Colo. 203. 2 As against its creditors, a corpo- ration has no right to apply its prop- 654 erty to the payments of debts (e. g., of its officers) which it is not bound to pay. Nat. Tube Works Co. v. Machine Co., 118 Mo. 305 ; ace. State v. Shapleigh Hardware Co., 147 Mo. 366. 3 See §§ 41-47. 4 See §525; also Railway Co. v. Ailing, 99 U. S. 463.