Bouton v. Dement

Citations

• 123 Ill. 142
• 14 N.E. 62

Syllabus

<p>1. Corporation—capital stock as a trust fund—power to release stockholder’s liability to the prejudice of creditors. The capital stock of a moneyed corporation is a trust fund for the benefit of its shareholders and creditors, and the directors, who hold the same as trustees, have no power to release the obligation of a subscriber to pay his subscription. The capital paid in and agreed to be paid is a fund, which the trustees can not squander or give away.</p> <p>2. So the release of a stockholder’s liability for stock taken, and the surrender of his note given for the same, for the worthless obligation of an irresponsible person, is such a dealing with the assets of the corporation by its officers as will not be tolerated, to the prejudice of creditors of the corporation.</p> <p>3. In this case a stockholder in an insurance company, being indebted by note of §10,000, secured by deed of trust, for shares of stock of the company, conveyed the land in the trust deed to an irresponsible person, taking his note for §10,255, secured by his deed of trust on the same land, payable to the insurance company, and procured the officers of the company to surrender his note and take the note of his grantee in lieu thereof. The company hypothecated this last note with a bank, which sold the same to the stockholder’s brother-in-law for §1500, which was its full value, and he, in turn, sold the same to the stockholder for the same price; the stockholder was also a director and a member of the finance committee of the insurance company: Held, that while the surrender and cancellation of his note of §10,000 for another, from which only §1500 was realized, was binding on the corporation, it was fraudulent and void as to its creditors.</p> <p>4. Gbeditob’s bibb—limiting decree to complainant’s demand. On creditor’s bill by a part, only, of the creditors, filed for themselves alone, and not on behalf of creditors generally, to set aside a fraudulent conveyance and enforce payment of