110 Ala. 632 | Ala. | 1895
The Mary Lee Coal & Railway Company sued out an attachment against the Etowah Furnace Co., which was levied upon certain pig iron as the property of the defendant in attachment. E. L. Knox
There are but three questions in the case : First. Did the Etowah Mining Company owe claimants? Second. Was the debt paid by the sale and delivery of the pig iron? Third. Whether the Etowah Eurnace Company could prefer a debt due the Etowah Mining Company to the other creditors of the Furnace Company; the directors and stockholders of the two corporations being the same persons.
As to the first proposition, the books of the two corporations were in evidence. A very strong argument is made by appellant, based upon erasures, interlineations and irregularities in the manner of keeping the accounts and books, and which would have great force, if the appellant was in a position to avail itself of these circumstances. The balances struck, show that the debts were due. The parties testified to the correctness of the demands and of the books in their then condition. Those who kept the books were examined as witnesses and were detained in the court room. The erasures, inter-lineations and irregular entries, as entered, led to the balances. The plaintiff, in its cross-examination, did not call for explanations, or make any references to the matters now complained of. If the witnesses had been called upon to explain the alterations of items in the books and irregular entries, and had failed to make satisfactory explanations, a different inference would be authorized. We do not find an entry or correction or change made in the books that is necessarily inconsistent with the positive testimony of the indebtedness claimed to be due. We would not be justified in holding that the suspicious circumstances appearing in tlfe books, were sufficient to overcome fjhe direct, positive evidence of so many witnesses, without calling their attention to the circumstances and giving them an opportunity to explain, as should have been done on cross-examination .
We do not doubt that the facts of the sale and delivery constitute a payment. The amount entered on the books of the Etowah Mining Company to the cx*edit of the Etowah Furnace Company, and also the credit entered on the account of indebtedness to E. L. Knox & Co. showing payment in pig iron,is not all the evidence
Js to the third proposition. In the case of Corey v. Wadsworth, 99 Ala. 68, it was declared as to insolvent corporations “that the assets are in a sense a trust fund for the payment of the corporation’s debts, and that it is both their [directors’] moral and legal duty to maintain a perfect equality, in their administration and disbursement, at least to the extent that they cannot prefer themselves.” The principle declared in the case was, that tho assets of an insolvent conporation- are a trust fund, held by the directors in trust for the benefit of creditors, and that the directors cannot prefer themselves. If we were to concede the correctness of the principle as contended for, we do not see how they are available to the plaintiff in the present case. If the Et-owah Furnace Company was insolvent at the time of the sale of the pig iron,' so that its assets were held by the directors as trustees only in trust' for all of its creditors, the plaintiff’s remedy was in a court of equity where the rights of its creditors could be protected, and where alone the' trust could be administered. The rule that a director of an insolvent corporation, cannot prefer himself, directly or indirectly, over other creditors, is but the application of a very familiar principle to the directors and stockholders of a corporation. No insolvent person who is a debtor, is
There is evidence tending to show that at the time of the sale of the pig iron, the Etowah Furnace Company was not possessed of sufficient assets to pay off all its liabilities, and the proof shows that claimants had access to the books of their debtor, the Etowah Mining Company. It is uncontroverted that the Etowah Furnace Company was a going concern at the date of the sale, and kept its business up to its full standard up to the levy of the attachment; a month after the sale and delivery of the iron.. It does not appear that the books of tlie Etowah Mining Company to which the claimants had access, furnished any evidence or indication of the condition of the Etowah Furnace Company. The claimants deny that they had notice or knowledge of the financial condition of the Etowah Furnace Company. The most material fact or circumstance tending to show notice, is that of relationship as brothers-in-law between claimants and George Nixon. Upon a fair consideration of the whole evidence, we do' not think the plaintiffs have discharged the burden to bring notice or knowledge of the insolvent condition of their debtor, conceding that it was insolvent for the purpose of the argument, to the purchaser of the iron. Our conclusion is that the claimants received the pig iron at a price fairly equivalent to its value, in payment of an antecedent debt, without notice, and are protected as bona fide purchasers. This was the conclusion of the trial court, and its judgment must be affirmed.
Affirmed,