98 Ga. 503 | Ga. | 1896
Certain creditors of the McIntyre Alliance Store, a mercantile corporation, brought against it an equitable petition for injunction and the-'appointment of a receiver, to which the directors of the corporation and several preferred cred
The record shows that the mortgages given to these parties were duly .authorized by a quorum of the directors at a lawful meeting, and that they were given to secure T)ona fide debts of the corporation; so it seems clear that the plaintiffs entirely failed to sustain the first of the two above stated grounds. It is, therefore, evident that the trial judge based his direction to the jury upon the second ground of attack made upon these mortgages, viz: that the execution and delivery of the same constituted an illegal and unjust discrimination against petitioners; though the record fails to disclose the precise theory upon which the judge’s conclusion was reached.
The evidence shows that prior to the execution of the mortgage in favor of the Banking Company, it had accepted certain promissory notes of the corporation, which were indorsed by certain of its directors. The original indebtedness to Waxelbaum & Sons was about $2,500, and at their request, some of the directors executed their joint promissory note for the sum of $3,000 and delivered the same to Waxelbaum & Sons to be held as collateral security for the payment of their demand against the corporation. Subsequently, they were given a mortgage for $851.78, to secure a note cotemporaneously executed for that amount, which.
As to the mortgage given to the Milledgeville Banking Company, we have no difficulty in reaching the conclusion that it cannot properly be held inoperative because of the fact that it was given to secure the payment of notes which had previously been indorsed by directors of the corporation. This precise question arose in the case of Weihl, Probasco & Co. v. Atlanta Furniture Manufacturing Co. et al., 89 Ga. 297, wherein this court held: “A creditor of a corporation by promissory note on which some of the stockholders or directors are indorsers, may, as further security for the debt, take bona fide from the corporation a mortgage upon some of the corporate property, even if the corporation be insolvent at the time of its execution.
And that the indorsers may incidentally be benefited by enforcing the mortgage, constitutes no valid reason why the mortgagee should be enjoined or why the mortgaged property should be placed in the hands of a receiver.” We now confidently adhere to the ruling then made.
In Lowry Banking Co. et al. v. Empire Lumber Co. et al., 91 Ga. 624, it was held that: “On principles of general law, the directors of an insolvent corporation cannot,
In the present case, it distinctly appeared that both the mortgages in question were given at the instance and demand of the mortgagees, who, so far as appears, were justly entitled to the preference they thus obtained over other creditors. It cannot be contended that the directors had not the legal power, in behalf of the corporation, to prefer creditors; and there is not the slightest sriggestion that they failed to exercise this power in a perfectly lawful and proper manner.
For the reasons above expressed, we cannot concur in the opinion entertained, by the court below with reference to the validity of the mortgages held by the plaintiffs in error, and to this extent hold that error was committed in directing a verdict finding the same void. Judgment reversed.