Rogers v. East Line Lumber Co. ( 1895 )

The disposition of the case heretofore made by us is adhered to. In the original opinion rendered, we used language holding a private corporation to be insolvent, and the property trust funds in the hands of its directors for the benefit of creditors, when it "has ceased to do business, or has taken, or is in the act of taking a step which will practically incapacitate it for conducting the corporate enterprise with reasonable prospect of success, or its embarrassments are such that early suspension and failure must ensue."

The language here quoted is from an Alabama case, where an officer of the insolvent corporation was a creditor thereof and seeking to recover his debt by attachment proceedings, and from which case Judge Stayton quotes said language with approval in the case of Hardware Co. v. Manufacturing Co., 86 Tex. 143.

This test is applicable when a creditor who is an officer of the insolvent corporation is seeking to collect his debt; but it may be too broad in its scope when applied to creditors generally. As to this, however, it is unnecessary for us to express an opinion, as the East Line Lumber Company had ceased todo business when its property was seized by the writ of attachment.

It is only necessary for us to hold, that when a private corporation ceases to do business, its property is held by its directors as trust funds for the benefit of its creditors, and the same is not subject to the levy of a writ of attachment. This, in our opinion, is in strict accord with the doctrine enunciated in the case of Hardware Co. v. Manufacturing Co., supra.

The motion for rehearing is overruled.

Overruled.

Writ of error refused.