Merchants Bank v. Goddin & Howison

Citations

• 76 Va. 503
• 1882 Va. LEXIS 55

Syllabus

<p>Manufacturing Corporation—Trust deeds to secure loans—Case at lar.— In 1867, the II M Co. obtained an act authorizing it to borrow not exceeding $30,000, without regard to rate per cent, prescribed by law or to V. C. 1860, ch. 57, § 34. Then the Co; executed coupon bonds of $500 each, sixty in number; and to secure them executed a trust deed, signed by the president, and having the corporate seal affixed by the secretary and duly acknowledged, conveying to G & H, trustees, real estate and machinery. It was conditioned for the sale of the trust property on default in the payment of any of the bonds which were executed and issued by the U M Co. Of these sixty bonds thirty-one were purchased by the S B of T, and nine by A P H. The other twenty were never issued. In 1869, the U M Co.,'desiring to sell the machinery, induced the S B of T and APH to release it, on assurance that the said twenty bonds had not been and would not be negotiated. The release, however, was executed not only by the S B of T and APH, but also by K, the president of the U M Co., who signed “ as holder of twenty bonds of $500 each as collateral for the payment of the floating debt of the U M Co.” In 1879. the trustees being required, sold the trust property to P for $13,500. P excepted to the title, urging, among other objections, that the trust-deed had not been properly executed ; that it infringed vested rights of the creditors of the U M Co. in giving preference; that the claim of the holders of the floating debts of the U M Co. to the twenty bonds, should be settled. Thereupon, the trustees brought their bill to determine all questions. The S B of T, A P H, and the U M Co. answered. W and the M B of B came in by petition claiming benefit of the twenty bonds held as collateral for payment of the floating debts, whereof they held large parts. The cause having been referred, the commissioner directed to ascertain the names, amounts, and priorities of the creditors of the U M Co. entitled to pa