142 Wis. 651 | Wis. | 1910
Tbe question presented to tbis court is: Does tbe complaint state a cause of action? It may be tbat tbe plaintiff is asking relief to wbicb it is not entitled, and tbat facts exist wbicb would deter a court of equity from- granting any relief, but if they do exist they are not before us. Tbe complaint shows tbat Goetzinger beld four fifths of tbe capital stock of tbe corporation as collateral security for tbe payment of an indebtedness amounting to- $15,000, which indebtedness was incurred by the defendant Donahue in reference to the purchase of tbe corporate stock and property of tbe plaintiff from Goetzinger; tbat Donahue, who was insolvent, was permitted by bis co-directors to borrow $12,450 from tbe corporation for bis own personal use, giving a worthless note therefor, due in three years from its date without interest, and tbat all tbe directors knew tbat Donahue was insolvent when tbe loan was made; tbat tbe corporation was thereby left without means to pay its debts; and tbat its assets amounted to little, if anything, more than its debts.
Tbe law would be very inefficient if it did not afford to tbe bolder of tbe collateral protection against tbe squandering of bis security by any such means. It would be just as inefficient if it did not afford a like protection to creditors of the corporation. It is no answer to tbe facts alleged to say tbat tbe Donahue notes may be paid as they mature. Goetzinger is entitled to have bis security protected from fraudulent dissipation in tbe meantime. If tbe corporation could take the worthless notes of Donahue due in three years for tbe money paid him, it could take notes maturing in ten years. A party taking corporation stock as security for a loan is not obliged to permit bis security to be squandered by the debtor who practically controls tbe corporation because perchance tbe debt will be paid at maturity. Tbe security having been wasted, tbe creditor should have tbe right to compel those responsible for tbe waste to make reparation. Tbe general creditors of tbe corporation might exercise tbe same -right if
By the CouH. — Order affirmed.