130 Ky. 1 | Ky. Ct. App. | 1908
Opinion of the Court by
Reversing.
The Carlisle Manufacturing Company was in debt to the Hazelhurst Lumber Company in the sum of $814.67,'for which the lumber company held its note, dated November 3, 1906, and due one day after date. On the 30th day of September the plant of the Carlisle Manufacturing Company was destroyed by fire. The plant was insured in the sum of $2,600. The insurance was paid, and the money was deposited in the People’s Bank of Bardwell. On February 5, 1907, this suit was brought by the lumber company against the Carlisle Manufacturing Company and the bank, in which it was charged that the manufacturing company, in contemplation • of insolvency and with the design of preferring the bank to its other creditors, had in October, 1906, paid the bank out of the insurance, money a debt of $1,600 which it owed it; that the manufacturing company was insolvent; and that the payment operated as an assignment for the benefit of all its creditors. The appointment of a receiver was asked, and a settlement of the affairs of the Carlisle Manufacturing Company. The defendants
The proof shows that the three notes referred to were executed for money borrowed for the Carlisle Manufacturing Company by Lovelace and the two Vaughns, who were its sole stockholders and managing agents; that the bank declined to take the note of the corporation for the money, and required Lovelace and the two Vaughns to execute their individual
The authorities are to the effect that if the creditor elects to give credit to the agent, and not to the principal, when he has all the facts before him, he will not be allowed to hold the principal liable for the debt, although the principal got the benefit of the money. 1 Am. & Eng. Cyc. of Law, 1138; Story on Agency, section 447; 1 Lawson on Rights and Remedies, section 107. Under the proof the bank clearly elected to make Lovelace and the two Vaughns its debtors, and it had no debt against the corporation. The sum of the ease is, then, that the bank had a debt of $1,600 against Lovelace and the two Vaughns, they had a like debt against the corporation for the money advanced to it, and the corporation had in the bank $2,600 of its own money deposited to its credit. In this situation of affairs Lovelace and the two Vaughns checked out to the bank $1,600 of the corporation’s money in payment of their debt to the
Judgment reversed, and cause remanded for further proceedings consistent herewith.