Planters Bank of Farmville v. Whittle

Citations

• 78 Va. 737
• 1884 Va. LEXIS 47

Syllabus

<p>.1 Corporations-Directors-Assets-Creditors.-Directors are bound to discharge their duties prudently, diligently, and faithfully, and apply the assets, in case of insolvency, for the benefit of creditors in preference to stockholders and other persons.</p> <p>3. Idem-Idem-Not trustees.-But they are not technically trustees nor bound to apply the assets ratably among the general creditors.</p> <p>3. Idem-Idem-Preferences-Pona fides.&emdash;They may not only make preferences between creditors, but such preferences may be made in their own favor if they be creditors. But in such cases they must act with the utmost good faith.</p> <p>4. Idem-Idem-Interested voters.&emdash;Objection that assignments of assets made by the directors to pay debts for which they are individually bound, are void, under Code 1873, ch. 37, | 18, which provides that “No member of the board shall vote on a question in which he is interested, otherwise than as a stockholder,” must be made in the court below, and cannot be raised for the first time in the appellate court.</p> <p>5. Idem-Idem-Assignments in payment of debts-Liens.-Code 1873, ch. 57> § 63, providing that liens or encumbrances giving preferences to creditors, except to secure debts contracted or money borrowed at the time of creating the lien or encumbrance, shall enure to the benefit ratably of all the creditors of the company existing at the time, does not prohibit the assignment of assets at their faceAalue in discharge of the company’s indebtedness, no lien being thereby created.</p> <p>6. Idem-Practice in chancery-Receiver-Injunction.-Until the appointment of a receiver and the award of the injunction, the management of the affairs of the company remains in the hands of the directors, and assignments by them in payment of the company’s debts may be lawfully made.</p>