Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/816

 § 813.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XVII. Moreover, that the trustees making the sale, and two of the directors of the corporation were members of this association, was held not to render the sale void, but merely to give the corporation a right to redeem within a reasonable time, and before new equities had intervened. 1 § 813. When, however, a corporation becomes insolvent, its assets constitute a fund for ratable distribution corporation amongst its creditors ; and it has been held that no is insolvent, creditor can by suit or execution gain priority of payment over the rest. 2 This, at least, holds true after the corporate assets have passed into the hands of an assignee, or a receiver has been appointed. 3 Under such cir- cumstances it is competent for a creditor to restrain the pay- ment to another of a greater proportion of his claim than the rest receive : 4 except, of course, when the claim of the other is based on a lien acquired before the insolvency of the corpora- tion. Subsequent lien-creditors, however, have a standing in court to contest the enforcement of prior incumbrances on the corporate property, 5 unless the security of the subsequent lien- creditors is in terms made subject to the prior incumbrance.'' 1 Kitchen v. St. Louis, etc., R'y Co., 69 Mo. 224. 2 Marr v. Bank of West Tennes- see, 4 Coldw. (Tenn.) 471. Contra, Breene v. Merchants, etc., B'k, 11 Col. 97. 3 Clinkscales v. Pendleton M'f'g Co., 9 S. C. 318; Hadley v. Freed- mau's Savings Co., 2 Tenn. Ch. 122; Roseboom ». Whittakev, 132 111. 81. ^ See Bank u. Lumber Co., 91 Tenn. 12; Dobson v. Simonton,. 86 N. C. 492; Balch v. Wilson, 25 Minn. 299; Smith v. Mosby, 9 Heisk. (Tenn.) v 501; Lanier v. Gayoso Savings In- stitution, ib. 506; Cowan v. Plate Glass Co., 184 Pa. St. 1. The plaintiff took a fire policy in an insurance company on an agree- ment that the policy might be ter- minated at any time on notice by the insurers and return of the proper proportion of the premium, for the unexpired term. The company be- 796 came insolvent and was dissolved. Its receiver notified all policy hold- ers that their policies were termi- nated. To this notice the plaintiff paid no heed, and subsequently suf- fered a loss. His claim was to par- ticipate in the assets of the company in respect of his loss; but the court held he could participate only on account of his unearned premium; and based their decision on the ground that after the dissolution of a corporation and the appointment of a receiver, a creditor could ac- quire no new rights against the cor- poration. Dean & Son's Appeal, 98 Pa. St. 101. See People v. Security Life Ins. Co., 71 N. Y. 222. 5 Commonwealth v. Smith, 10 Allen, 448; see Fox v. Seal, 22 Wall. 424. Compare § 185. 6 Bronson v. La Crosse, etc., R. R.
 * Pfohl 0. Simpson, 74 N. Y. 137.