Peterson v. Brabrook Tailoring Co.

Citations

• 150 Ill. 290
• 37 N.E. 242

Syllabus

<p>1. Voluntary assignment — what constitutes. A transfer of property,, to be treated as a voluntary assignment under the statute, must be-a conveyance to an assignee in trust for the creditors. A transfer of' property by an insolvent directly to his creditor, for the purpose of securing or providing the means for the payment of that creditor, only, is not a voluntary assignment.</p> <p>2. Same — whether effected by giving judgment notes. The giving of judgment notes by an insolvent corporation, due on demand,.to three-of its creditors, followed by the entry of judgments thereon and the levy of executions on all the tangible property of the corporation, will not, of itself, constitute a voluntary assignment, nor is it, in any proper ■ sense, a diversion or misappropriation of a trust fund.</p> <p>3. Insolvent corporation — preferring creditors. The mere fact that a corporation may be insolvent does not so far charge its directors and officers with the character and functions of trustees as to take from them the power to make preferential transfers of the corporate assets, so long as they act in good faith, and do not attempt to prefer themselves.</p> <p>4. Same — misapplying funds — effect on innocent creditors. A corporation being unable to meet its obligations, procured a loan of $5000 ■ from certain of its creditors to enable it to continue business, and gave them its judgment notes for their debts and such loan, which notes were payable on demand. The creditors, becoming fearful of trouble with other creditors, caused judgments to be entered on their notes,. and took out executions, which were levied on all the tangible property of the corporation. The $5000 loan was afterward paid over to the principal stockholder, to apply on indebtedness to her: Held, that the ■ misapplication of the loan could hot affect the creditors thus secured,, they being in no respect privy to such misapplication.</p>