an honest purpose to secure the payment of his own debt, but from a desire to aid the debtor in defeating other creditors, or in covering up his property, or in giving him a secret interest therein, or in locking it up for the debtor's own use and benefit, he will not be protected, and the sale would be fraudulent as to other creditors, because in such cases the fraud of the debtor becomes the fraud of the preferred creditor because of his participancy therein."

In Smith v. Schwed, 9 Fed. Rep. 483, it was decided "that if the purpose of the preferred creditor is, not to secure his debt, but to help the debtor cover up his property, he cannot shield himself by showing that his debt was bona fide."

In Drury v. Cross, 7 Wall. 299, the preferred creditors unlawfully combined together to raise the decree to an extent which prevented all fair competition at the sale of the property, and therefore, in that case, they were not protected. James v. Railroad Co., 6 Wall. 752, was a similar case of actual fraud by certain parties to prevent fair competition at a

sale.

In the case of Cox v. Miller, 54 Tex. 16, there is a discussion of whether the facts in that case show that the mortgage was given to secure a bona fide debt, or whether it was simply a colorable pretense resorted to for the purpose of covering up the property. The facts were set forth, among which were, that the property conveyed was greatly in excess of the pretended debt, and that the security was only a part consideration for the conveyance, and that the motive of the conveyance was to transfer to the grantee a large amount of property under the false claim that it really belonged to her, and for the purpose of putting it beyond the reach of creditors.

In Thompson v. Furr, 57 Miss. 478, it appeared that there was a secret agreement between the debtor and creditor, secured by a mortgage, that a one-half interest in the property conveyed was to be held by a secret trust for the benefit of the debtor, and was not to apply to the payment of the debt; and the consideration of the conveyance was falsely set at about double the actual debt, for the purpose of misleading the creditors, which, of course, would be a fraud upon the creditors in fact; and wherever there is a fraud in fact, notwithstanding a bona fide debt may be incidentally secured, it vitiates the transaction.

These and many other cases which are cited show that where the conveyance to a creditor having a bona fide claim is in ex

cess of the actual debt, or is given to favor the debtor, or to merely cover up the property from other creditors, or to prevent a fair sale of the property, then the transaction, sale, or conveyance so fraudulently made to the creditor having the honest debt is void, at least as to the creditors not preferred: See Wallach v. Wylie, 28 Kan. 138; Winstead v. Hulme, 32 Kan. 568. But in this case the findings, taken as a whole, bear no such interpretation. The chattel mortgage, according to the findings, was not given to favor the insolvent firm, but to protect honest debts due the bank. The mortgage was not in excess of the debts secured, or given to cover up property, or to prevent a fair sale thereof.

The rehearing will be denied.

CHATTEL MORTGAGES - REGISTRATION NOTICE.— Registration of a chattel mortgage is constructive notice of its existence in any county in which the mortgaged property may be: Grand Island etc. Co. v. Frey, 25 Neb. 66; 13 Am. St. Rep. 478, and note.

FRAUDULENT CONVEYANCES

CHATTEL MORTGAGES TO ONE CREDITOR.

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A chattel mortgage to secure future advances is not fraudulent as to other creditors: First Nat. Bank v. Turnbull, 32 Gratt. 695; 34 Am. Rep. 791, and note; Tully v. Harloe, 35 Cal. 302; 95 Am. Dec. 102, and note. A mortgage by a factor to his principal to secure goods appropriated by the former is not fraudulent as to other creditors if the employment still continues: Blood v. Palmer, 11 Me. 414; 26 Am. Dec. 547. See note to Badlam v. Tucker, 11 Am. Dec. 203. A chattel mortgage to secure a bona fide creditor is not fraudulent: Bliss v. Couch, 46 Kan. 400; McFadden v. Ross, 126 Ind. 341. A creditor in failing circumstances, under the insolvency laws of this state, may mortgage his entire property to one creditor and leave the rest unsatisfied: Turner v. Iowa Nat. Bank, 2 Wash. 192. A conveyance made in good faith to secure a bona fide creditor is not void as to other creditors: Erdall v. Atwood, 79 Wis. 1.

CORPORATIONS-RIGHT OF STOCKHOLDERS TO SELL STOCK. - Stockholders in a corporation, including its directors who own stock, have the indisputable right to dispose of their stock at their pleasure. CORPORATIONS-POWER OF MAJORITY OF STOCKHOLDERS To Wind up. In the absence of any express statutory prohibition, a majority of the stockholders in a corporation, acting within the scope of their authority, may wind up its affairs and dissolve it, for reasons deemed by them sufficient; and the courts are powerless to inquire into and determine the expediency or sufficiency of the motives which dictated such action, although it entails a loss upon the minority of the stockholders. CORPORATIONS. — STOCKHOLDERS are under no obligation to inform their costockholders of their intention to exchange their stock for the stock of another corporation, or of their intention to invest therein.

Leonard, Marks, and Bruen, for the appellant.

Bayne, Denégre, and Bayne, and Thomas J. Semmes and Legendre, for the appellees.

BERMUDEZ, C. J. The pith of the elaborate incriminating petition in this case is, that the plaintiff, as a stockholder of the Bienville Oil Works, has, in consequence of ill practices, in dereliction and violation of duty, of the directors of that corporation, aided and abetted therein by the representatives of an oil trust organization, sustained such grave injury that his shares (twenty-five) have become valueless.

He therefore prays for judgment against those directors and representatives in solido for the loss inflicted, namely, at least the value of the stock at par, viz., two thousand five hundred dollars.

The petition was accompanied by interrogatories on facts and articles, designed to elicit from the parties sued significant matters in support of the averments.

The defenses set up are, that the claim is one sounding in damages arising ex delicto, and, as such, is barred by the prescription of one year; that if injury was occasioned as charged, it was sustained by the mass of the stockholders alike, and by no one in particular, as distinguishable from that done to the others, and the plaintiff has no right of action; that the facts alleged are not true and not proved, and if so, that the directors, in their individual capacity, had the right to act as they did; that, officially, they merely executed the will of a majority of the stockholders, legally expressed, in suspending the further operating or working of the company, and disposing of its assets and discharging its liabilities by a liquidation of its affairs.

On behalf of the parties who are asked to be cited, as representing the oil trust, it is urged that they do not represent that organization, which has therefore not been reached by the process of the court; that, as holders of certificates issued by the concern, they cannot, under any circumstance, be held responsible, as is attempted to be done.

In an elaborate and well-prepared opinion, the industrious and able district judge has unfolded the condition of the affairs of the Bienville Oil Works Company from their incipiency down to their discomfiture. He has passed on the merits of the case as to the directors; and as concerns the alleged representatives of the trust, he has held that it was not in court in this litigation, and declined to entertain the action against it, concluding that the certificate-holders would not be made liable, as was sought.

From the judgment thus rendered the plaintiff has appealed. The gravamen of the complaint seems to be, that the directors of the Bienville Oil Works Company, by a secret and fraudulent combination and bargain with the American Oil Trust, an alleged unlawful organization, transferred their stock in the company to the latter to subserve its own interests, and in disregard of their obligations to the other stockholders, and in violation of their rights, have thus wrecked the company, thereby destroying the value of its stock other than that held by the trust.

The following are the salient facts of the case: In 1871 the Bienville Oil Works Company was organized in New Orleans.

For some time it was in a flourishing condition and did prosperous business, which, however, in the course of time, finally declined, so that the stock was worth sixty only on the 1st of July, 1886, when, some days later, a liquidation having been decided upon, it sank to little or nothing. In 1884 certain parties had created an American cotton-oil trust, the purpose of which was the acquisition of oil mills and refineries. tificates of stock for upward of forty millions were issued, as a means to acquire the shares of stockholders in the oil factories in contemplation. By using the certificates in that manner, parties charged with representing the trust succeeded in acquiring a majority of the stock of the Bienville Oil Works Company, the stock remaining in their names, or in that of appointed persons, and not put in that of the trust. At this juncture, the stockholders, by the required majority, considering that it was their own interest, as well as that of the other stockholders who would not concur, to suspend absolutely, or stop permanently, the working of the mill, and to liquidate its affairs, did so ordain; and the directors acted in furtherance of that decision, the result being that the realized assets proved barely sufficient to meet the debts of the defunct corporation.

Indisputably, the stockholders of the Bienville Oil Works Company, including the directors, who necessarily were such, had the right to dispose, at their pleasure, of the shares which they owned in the corporation.

There exists no law which requires that a mercantile organization shall continue in business, however ruinous, when the majority of the stockholders, as fixed by the charter, or by the law when not so fixed, deem that it is their interest to go no further, and to wind up its affairs.

Section 687 of the Revised Statutes expressly authorizes three fourths of the stockholders of a corporation to dissolve it altogether.

The power and rights of such majority in this respect is placed beyond judicial supervision and control.

The discretion is absolute in them, and the minority have no occasion, legally, to complain. By their accepting the terms of the charter, and the laws under which the same was framed, and the body organized, the award of the majority becomes that of a power of the choice and selection of the stockholders, to which the minority must submit.

In the absence of any express statutory prohibition, a ma

AM. ST. REP., VOL. XXVL-12