Harts v. Brown

Citations

• 77 Ill. 226

Syllabus

<p>1. Corporation—director may deal with same as a stranger. A director or stockholder of a private corporation may trade with, borrow from, or loan money to the company of which he is a member, on the same terms and in like manner as other persons; but where a director loans money to his corporation, taking a deed of trust to secure the same, he must act fairly, and he free from all fraud and oppression; and if, in so doing, I10 acts for the interest of the company, and imposes no unfair or unreasonable terms, the security may he enforced the same as if given in favor of any other person.</p> <p>2. Same—directors may purchase indebtedness and property of company the same as a stranger. The managers or directors of a private corporation are not trustees of its property in such a sense as to disable them from purchasing the property and stock belonging to it. with the same effect as though they were not managers or directors. They will have the right to purchase the bonds or other indebtedness of the company.</p> <p>8. Same—when purchase by directors will be in bad faith. If the corporation has money, property, or assets that can be converted into money, with which to redeem its property from a judicial sale, or from the lien of a deed of trust, then it seems that a purchase of the certificate of purchase, or the bonds of the compan)', as a means by which to acquire its property, by the directors, -would be in bad faith, and the title thus acquired would not be sustained in equity.</p> <p>4. But where the company is insolvent, and has no means to discharge its indebtedness or redeem property sold, and tne directors give all the stockholders itn opportunity of making advances to relieve the company of its embarrassment, which they refuse to embrace, the directors will have the right to purchase such indebtedness and acquire title to the corporate property, by enforcing its sale under a deed of trust given to secure such indebtedness, and the other stockholders will ha