64 Wis. 639 | Wis. | 1885
This is an action brought by the appellants to foreclose a mortgage given by the defendant lumber company, by its president and secretary, to the said appellants and the defendant T. P. Mathews and one George O. Smith, on the 4th day of February, 1884, on all of the real property of said corporation, to secure a bond in the penal sum of $100,000, given at the same time by said company to said mortgagees, conditioned to pay them certain indebtedness of the company past due them, respectively, in the
The circuit court substantially held that said mortgage was given without authority, because the majority of the quorum of the directors voting that said bond and mortgage be given were interested in the same, and that said company was then insolvent; and that the directors held the property in trust for the creditors, and the execution of said
The principles involved in this suit are really very simple, and almost elementary, and not at all complicated; and we Cannot but think they have been greatly magnified and more earnestly contested on account of the amount in controversy. The plaintiffs contest the power of the receiver, Pm-eh&r, to give the mortgage to the bank on the ground of the want of jurisdiction of the court to appoint him or any one receiver in the case of Clark against the company. These plaintiffs were directors of the company, and one of them the secretary, and both mortgagees, when the said Parcher was appointed such receiver, and as directors and as mortgagees counseled and advised his appointment, and consented thereto, and the directors over and over again recognized and confirmed it by dealing with* him as such, and placing the property of the company in his hands; and, after his appointment, the plaintiffs, together with the defendant Mathews, as said mortgagees, by writing under seal, authorized the said receiver to borrow not exceeding $15,000, and give a mortgage on the property of the company in his hands to secure it, for the purpose of carrying on the business in running the mills and sawing up the logs, and released their said mortgage so far as it would have preference of the mortgage so given by the receiver, and so as to give the same priority to their said mortgage. There is abundant evidence of the plaintiffs’ estoppel to dispute the authority of said, receiver, both in $>aAs and by deed. But accepting the allegations of the complaint in that case as
But the matter of this bank mortgage is of only incidental' importance in this case. The main question is of the valid
Directors, officers, and agents, and other like trustees, cannot mortgage or convey to themselves any more than one can contract with himself. The idea that the same persons constitute different identities of themselves by being called directors or officers of a corporation, so that, as-directors or officers, they can convey or mortgage to or; contract with themselves as private persons, is in violation of common sense. In re Taylor Orphan Asylum, 36 Wis.; 552, and cases above cited. See 1 Perry on Trusts, § 207, and Morawetz on Priv. Corp. § 245; Walworth Co. Bank v. Farmers' L. & T. Co. 16 Wis. 629; Cumberland C. & I. Co. v. Sherman, 30 Barb. 553.
But it is very clear to us that the mortgage is void in view of the above principles, and that disposes of the action of foreclosure. Beyond that, the findings of the court are not very important as to the rights of the defendants.
By the Court.— The judgment of the circuit court is affirmed.