Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/688

 § C69.] § 669. Kelative rights of creditors. THE LAW OF PRIVATE CORPORATIONS. [CHAP. XL A court of equity, however, will regard the relative rights of different creditors, and will restrain one creditor from absorbing, after the corporation has become insolvent, its available assets to the unjust 4 Ardesco Oil Co. v. North Am., etc., Co., 66 Pa. St. 375; State v. Bank of Md., 6 Gill & J. (Md.) 205; Union Bk. v. Ellicott, ib. 363; Shock- ley v. Fisher, 75 Mo. 498; Lionberger v. Broadway Sav'gs Bk., 10 Mo. App. 499; Lamb v. Cecil, 25 W. Va. 288; Chamberlain v. Bromberg, 83 Ala. 576; Kendall v. Bishop, 76 Mich. 634; Boynton v. Roe, 114 Mich. 401. The board of directors of an insol- vent corporation may make the as- signment. See § 225. 5 Ringo v. Biscoe, 13 Ark. 563; Savings Bk. v. Bates, 8 Conn. 505; Whitwell v. Warner, 20 Vt. 425; Ar- thur v. Commercial, etc., Bk., 17 Miss. 394; Wilkinson v. Bauerle, 41 N. J. Eq. 635; Vail v. Jameson, 41 N. J. Eq. 648; Warfield v. Marshall County Canning Co., 72 Iowa, 666; Rolling v. Shaver Wagon Co., 80 Iowa, 380; Pyles t>. Furniture Co., 30 W. Va. 123; Foster v. Mullanphy Planing Mill Co., 92 Mo. 79; Butler Paper Co. ». Robbins, 151 111. 588; Worthen v. Griffith, 59 Ark. 562 (preferences are now forbidden by statute in Arkansas); Sells v. Gro- cery Co., 72 Miss. 590; Albergher v. Bank, 123 Mo. 313. See Cat! in v. Eagle Bk., 6 Conn. 233; Plow Co. v. Rude, 60Kas. 145; Ames & Frost v. Heslet, 19 Mont. 188; Wyeth, H. & M. Co. v. James Spencer B. Co., 15 Utah, 110. Compare Hopkins v. Gallatin Turnpike Company, 4 Hump. (Tenn.), 403; Pope v. Brandon, 2 Stew. (Ala.) 401; Coats v. Donnell, 94 N. Y. 168; Bergen v. Fishing Co., 42 N. J. Eq. 397; Bank v. Cot. Mills, 115 N. C. 507; Henderson v. Indiana T. Co., 143 Ind. 561; Shaw v. Robin- 668 son, 50 Neb. 403; Wallachs v. Same, ib. 469; Campbell, etc., Co. v. Mar- der, ib. 283; German Nat. Bank v. First Nat. Bank, 55 Neb. 86; Seeds Dry Plate Co. v. Heyn Photo-Supply Co., 57 Neb. 214; Conway v. Smith Mercantile Co., 6 Wyo. 468. In the absence of lien created by contract, or rights created by legal proceedings, the officers of a corpo- ration may exercise a reasonable and proper discretion as to the order in which debts of the corporation shall be paid. Newport, etc., Bridge Co. v. Douglass, 12 Bush (Ky.), 73. An insolvent corporation has a right to secure one creditor in preference to another. Glover v. Lee, 140 III. 102; Bank v. Salt Co., 90 Mich. 345 ; Prouty v. Prouty, etc., Shoe Co., 155 Pa. St. 112. But after a judgment creditor's bill has been filed the officers cannot go on converting corporate assets into money and paying creditors, giv- ing preferences. Turnbull v. Pren- tiss Lumber Co., 55 Mich. 387. Com- pare Prentiss v. Nicholas, 100 U. S. 227. Proof that at the time of the de- livery of a mortgage by a corpora- tion, the corporation was insolvent, as a matter of fact, is not conclusive evidence that the transfer (mort- gage) was made "in contemplation of the insolvency of such company " within the meaning of a statute (1 N. Y. R. S., 603, § 4) declaring such transfers unlawful; to come within the prohibition of the statute, the act must have been induced by the existing or contemplated insolvency of the company. (The creditor in this case was not an officer.) Pauld-