Richardson's v. Green

Citations

• 133 U.S. 30
• 10 S. Ct. 280
• 33 L. Ed. 516
• 1890 U.S. LEXIS 1888

Syllabus

<p>While the relations of a party towards a corporation, as a director and officer, or as its principal stockholder, do not preclude him from entering into contracts with it, from making loans to it, and from taking its bonds as collateral security, a court of equity will refuse to lend its aid to their enforcement unless satisfied that the transaction was entered into in good faith, with a view to the benefit of the company as well as. of- its creditors, and not solely with a view to his own benefit.</p> <p>In the case of a corporation, as in that of a natural person, any conveyance of its property, without authority of law, in fraud of its creditors, is void as to them.</p> <p>The capital stock of a corporation, when it becomes insolvent, is, in law, part of its assets, to be appropriated to the payment of its debts, and if any part of it has been-issued:without being fully paid up, a court of equity may require it to be paid up.</p> <p>R. loaned to a railroad company $100,000 upon its notes, and received from it 1250 shares of paid-up stock- as a bonus, and 200 mortgage bonds of the company, and the practical control of the board of directors of the corporation. After this he demanded of this board 100 more bonds, as further collateral, and they agreed to it. Subsequently he proposed to the board that he would make further advances if they would put 300 ijiore bonds in his hands as collateral, and they assented to this proposal; but he never made such further advances. These 400 bonds, together with other bonds and property of the company, then came into his hands at a time when he was acting as and claiming to be the treasurer of the company. After the insolvency of the company took place, R. claimed to hold these 400 bonds individually, as collateral for his debt; Held, that, as between him and the other creditors of the company, he could not, under the circumstances, hold them as collateral for his debt.</p> <p>At the last term of court motions to dismiss Nels