Rook Island Butter Co. v. Freeman , 144 N.Y.S. 317 ( 1913 )

Seabury, J.

The plaintiff as assignee of F. E. Rosebrock & Company, a domestic corporation, sues to recover $637.92 from the defendant. The defendant claims that prior to the assignment to the plaintiff he and plaintiff’s assignor had an accounting wherein all differences were adjusted between them, and the defendant paid to plaintiff’s assignor all moneys found to be due upon such accounting.

It appears from the evidence that the defendant was indebted to the plaintiff’s assignor in the sum of $637.50. The plaintiff’s assignor was indebted to its president for salary due in a sum larger than $637.50. The president of plaintiff’s assignor caused his personal account to be charged with $635.57 and the defendant’s account to be credited with the same sum.

An officer of a corporation, with knowledge of its insolvency, cannot by a bookkeeping entry appropriate property of the corporation to pay a debt due to him. To sanction the act of the president would, in effect, permit the transfer of corporate property to an officer of an insolvent corporation for a consideration other than the full value of the property paid in cash, and is in violation of section 66 of the Stock Corporation Law and, therefore, void. Montague v. Hotel Gotham Co., 149 App. Div. 687.

Gtuy and Burnt, JJ., concur.

Judgment reversed and new trial ordered with costs to appellant to abide event.